Kaiser Permanente’s expansion in Salinas, California, highlighted medical properties’ advantages as an investment while significantly improving service choices for residents.
The Oakland, California-based healthcare provider signed a lease last year within the Boronda Crossing shopping center at 1930 N. Davis Road. The deal, brokered by CBRE, has been selected by a panel of local industry professionals as the winner of the 2024 CoStar Impact Award lease of the year for Salinas.
Deals for medical properties or other buildings with single-tenant occupancy often are viewed as a low-risk hedge against times of economic instability. Because they’re specialized and expensively built out, medical facilities also are viewed by investors as being at low risk of losing their tenants.
Kaiser Permanente, one of the nation’s largest nonprofit health organizations, began its search for a Salinas medical office location in mid-2021. The 30,000-square-foot requirement was difficult to find due to high demand in Salinas for both office and retail.
CBRE negotiated a 10-year lease on a stand-alone building that was off the market. While the building was occupied, the tenant was interested in accepting a buyout and relocating its business. The deal was complicated and took several months to finalize.
About the Deal: Kaiser Permanente leased 1930 N. Davis from T&T Enterprises, owner of Boronda Crossing, a 335,000-square-foot retail property spanning 30 acres.
What the Judges Said: “This lease is very impactful for a couple of key reasons. First, and most importantly, it fulfills a need in the community. Secondly, they leased a very large and visible building. [It] would be very difficult to find another retail store as most retailers have downsized their concept since COVID-19 and within the current economy,” said William Grimm, chief operating officer, Cannery Row Co.
They Made it Happen: Michael Schoeder, executive managing principal, Cushman & Wakefield; Reuben Helick, managing director, Cushman & Wakefield.