Developer checks in to Antelope Valley with hospital

HEALTHY
OPPORTUNITY
R E A L ESTAT E Q UA RT ER LY
• FEBRUARY 8, 2016
SPECIAL REPORT
SAN FERNANDO VALLEY BUSINESS JOURNAL
Developer checks in to Antelope Valley
with hospital-adjacent wellness center.
By CAROL LAWRENCE Staff Reporter
Visionary: Developer
John Thomas,
above, plans to turn
vacant land into the
Oasis of L.A. County.
T
PHOTO BY DAVID SPRAGUE
he Antelope Valley needs more health care providers, according to John Thomas, and the developer plans to meet demand
by building a massive wellness campus next to the Palmdale
Regional Medical Center.
Thomas is proposing to build a 420,000-square-foot complex
with the aim of drawing L.A.’s best-known medical providers
to set up outpatient services there. He’s sweetening the pot for
both providers and future patients with health-oriented retail and
restaurants, covered public parking, a gym and a hotel for visiting
physicians and families of patients. As a second phase, he plans
to include senior housing and luxury condominiums to create a
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R E A L E S TAT E Q U A R T E R LY
Continued from page 11
“wellness village.”
Thomas, president of L.A. developer
Thomas Partners Properties, envisions
the Oasis of L.A. County development as a
wellness village that will aim to make visits
to the doctor more like a trip to a shopping
mall.
The strategy behind the concept is based
on the statistic that about 35 percent of
Antelope Valley residents who are insured
leave the area for health care, mostly for
the top providers in the central L.A. market,
Thomas said. He aims to rechannel those
health care dollars into the local economy by
attracting providers to Oasis.
With a projected budget of $200 million,
the development will have five facilities for
outpatient services adjacent to Palmdale
Regional Medical Center as well as a satellite medical school and a high-tech pavilion
for future medical conferences.
“The key thing is bringing major household-name brands – health care systems – to
the campus,” Thomas said. “Patients will
have the ability to trust coming to the Oasis
because these systems will already be part of
their network.”
Oasis is set to go before the city’s Planning Commission in the upcoming weeks.
Thomas believes it will be a smooth go
because the land is zoned for health care and
he expects a July ground-breaking with a
completion date a year later. Also, the proposal has the blessing of Palmdale’s mayor
and the favor of Palmdale Regional’s chief
executive if it materializes as planned.
“This wellness center fits beautifully in
our vision to create a world-class medical
center,” said Mayor James Ledford Jr.
“This brings economics to our region that I
think is going to help our future a lot.”
PHOTO BY DAVID SPRAGUE
Signed Up: John Thomas of Thomas Partners Properties believes medical providers will bring patients to his Palmdale site.
High desert
The Thomas family has owned property
in Palmdale since the 1950s, when Thomas’
grandfather followed the aerospace industry
out to the high desert and bought more than
60 acres in anticipation of future growth. It
has taken longer than expected, but the family
has held on to the property. Oasis would sit
on 17.5 acres bordered by West Palmdale
Boulevard and Tierra Subida Avenue.
Back in 2004, the family lost part of its
original holdings, Thomas said, when Palmdale took a portion through eminent domain
to build the existing hospital, which opened in
2010. Now that facility, owned by Universal
Health Services Inc. in King of Prussia, Pa.,
wants to grow its outpatient services.
Richard Allen, Palmdale Regional’s chief
executive, said he suggested to Thomas and
his leasing broker they should build offices
for outpatient services as it would help the
hospital grow.
“Having that type of development gives us
the opportunity to have a space that we might
be able to avail ourselves to place certain outpatient services close to the hospital,” he said.
“They’ve been very attentive to do something
in the long range that is supportive of what’s
happening in Palmdale and where the regional center is going.”
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Well Situated: Eventually, Oasis will have office, retail and residential by the hospital.
Palmdale and other regional centers are
looking to diversify, Allen said, as insurance
reimbursements to health care facilities for
patients’ medical bills continue to decrease.
His hospital is already developing relationships with some of L.A.’s providers to bring
complementary services as well as academic
affiliations to the Antelope Valley.
“One of the reasons (Oasis) makes sense,
and one of reasons we’re expanding, is to
bring an even higher level of tertiary services,
and right now that is being referred out,” he
said, referring to highly specialized surgeons
– such as colorectal or breast surgeons – who
patients currently have to drive to Los Angeles to see.
The services Thomas plans for the five
buildings – entitled now for 20,000 square
feet each with three to four stories – include
outpatient surgery, ambulatory care, imaging,
primary care and mammography. He’s signed
up Irvine’s Manarino Realty to lease the
space and said he’s in final discussions with
several L.A.-based providers.
Vacancy rates for Antelope Valley’s general office market are high, according to data
provided by Colliers International. The
most recent fourth-quarter vacancy rate was
18.5 percent, an uptick from 18.2 percent
year to year. Asking rates in the most recent
quarter were $1.65 a square foot.
But the picture is much healthier for medical office space.
According to Jeremy Barbakow, senior
vice president at Encino brokerage NAI
Capital Inc., the newest medical office properties in the Palmdale market – a two-story,
58,000-square-foot building built in 2008 in
the Palmdale Corporate Center on Trade Center Drive and a three-story, 58,000-square-
foot building built in 2009 on Palmdale
Regional’s campus – are both asking $2.05 a
square foot. More such properties are planned
on Trade Center and those are premarketing
at $2.25 a square foot.
Barbakow forecasts that Thomas’ proposed properties, given their location next
to the hospital and the campus setting, could
reasonably fetch rent for around $2.50 a
square foot.
He added that while Palmdale has recently undergone a population influx of young
families and senior citizens, some of those
new residents have been forced back to their
former cities to be treated by doctors offering
specialized treatments.
“Oasis will be the catalyst to motivate
these types of doctors to lease medical office
space in the Antelope Valley,” Barbakow said.
If the first phase leases up well and is successful, Thomas said he will build a residential component – senior housing and luxury
housing – on 45-plus acres he and his family
control nearby.
“In a first phase, you want to build critical mass and services so people will have a
reason to be there,” he said. “That would be
followed potentially by residential a year or
two after.”
Regional impact
Aside from attracting medical providers,
the new development, if it materializes, could
also be a major economic driver for the Antelope Valley.
The self-contained village concept combines numerous services in one place where
people could potentially spend several hours,
said public policy and land-use expert Robert
Scott, executive director of the Mulholland
Institute in Calabasas. With tenants’ employees, patients and visitors coming to use the
gym, walking paths, hotel and medical conference facilities, there are several layers of
revenue opportunity for the developer and
subsequently, the local economy.
“I think the idea now, when we make an
investment in this range of $200 million,
you’re really talking about a major improvement because these are anchors for bringing
the community up and making it stronger,”
Scott said. “And it’s a major health care facility in an expansion area for L.A. County.”
However, other big projects – such as
some large shopping malls – have tried the
self-contained concept but haven’t done well
in retaining business because of poor circulation plans for getting people around the
complex or insufficient parking that turns off
visitors, he said.
“It has to deliver on the promise,” Scott
said.
To ensure parking issues won’t threaten
the proposed project, Oasis will include two
public parking garages with a total of 2,041
spaces, Thomas said, noting visitors will likely have to pay a modest fee.
The city has no other parking structures,
but is working on a public-private partnership
that can help fund the garages, according to
Mayor Ledford.
Both Ledford and Allen at the hospital
said the structures are critically important.
“You’ve got to have convenience,” Ledford said.
Thomas said the event that spurred his
concept for Oasis was an accident his father
had about three years ago that required the
family to spend extensive time near the facility where his father was rehabilitating. That
made him think of Palmdale families who
might have to drive to Los Angeles if facing
similar situations.
“It was a blessing now that the mayor
(then) decided to put Palmdale Regional
behind us,” he said. “Had we built a major
Walmart, we wouldn’t have been able to do
this. It’s a perfect opportunity.”
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