Playbook: SoCal Medical Office Building
Bellflower, CA
2024
Part I: Final Family Trust Disposition Heralds an Exciting (and Unanticipated) Development Project
The brokerage industry may appear to be fast paced, but sometimes it’s the “slow” assignments that unfold over years, perhaps even a decade, that are the most rewarding.
The story of this demolition photo begins with valuations and strategies built over the course of several years for a family trust. The trust was comprised of four properties throughout the country, and had been set up to pay the higher education tuition of blood relatives until the lease termination of the main tenant on the Bellflower property. Over the course of the trust’s existence, 40+ people attended some form of higher education, and Monarch actually helped with lease negotiation to extend the trust as long as possible.
When it came time to sell the assets, we were beholden to the 13 beneficiaries, who, two generations later, did not all know each other. In these situations, communication, patience and leadership are essential. It’s our job to do everything we can to support the fiduciary duty of the trustees by fully exposing the property and securing the best possible offer.
On the Bellflower asset, our marketing created a story that drove massive activity on the unencumbered 1.55 acre parcel with a 26K SF medical office building on it. Situated in LA County near the border with Orange County, the property was just north of Long Beach, and boasted extreme population density and huge ‘SoCal’ traffic counts.
We positioned the sale as a development play, with a site plan to represent potential configurations that included both re-use and ground up proposals. We received 13 offers in total, including one direct from the QSR tenant that most of the developers had in tow.
Amidst the noise of the QSR activity, things got interesting. This is where, as brokers, we had to to let the market speak out loud in the best interest of the seller. The property was surrounded by a dense medical campus, and a medical developer came in with two tenants in mind for a re-use of the existing building. After multiple rounds, they ultimately presented the most competitive offer, which the trust accepted. Through our approach to running a fair bidding process, we earned goodwill with the buyer that allowed us to overcome various issues throughout the escrow process.
The deal became particularly interesting when the buyer's development plan took an unexpected direction. The buyer approached the city of Bellflower with a pitch to bring high quality jobs and enhance health services through their planned medical development. Bellflower, a Kaiser Permanente hub in Southern California, said they actually wanted the QSR tenant that everyone knew was eager for the site. So the developer pivoted, and once in control of the site, negotiated a favorable ground lease with the QSR restaurant.
In Playbook Part II we’ll share how the development and sale of the asset unfolded.
