The Location
55 E California Blvd sits in central Pasadena, and within a short walk of the Pasadena Civic Center corridor. The submarket is one of the stronger office and medical-professional markets, anchored by Huntington Hospital about a mile northeast.
Pasadena's medical office vacancy has historically run driven by a dense specialist and physician-group.
The Setup
The building is a 32,052 SF, two-story medical office constructed in 1983 and renovated in 1991. It sits on a 34,848 SF lot.
What an Operator Sees
Meridian didn’t buy this building because it was cheap. They paid $417/SF.
Huntington Physicians signed a new 10-year lease for roughly half the building, taking occupancy from 52% to 82.5% almost immediately.
Meridian paid up, but they bought a much clearer income stream on day one.
And there’s another piece I like: Zions financed $10.6 million of a $13.35 million purchase. In a market where lenders are still selective, that tells you the combination of the asset, tenant and lease got them the loan.
My takeaway: the market isn’t frozen, it’s repricing risk.
Buyers will still pay a premium when someone else has already removed a big piece of the uncertainty.
For owners, the lesson is simple: you don’t always need to improve the building to increase its value. Sometimes you just need to make the income more secure by finding the right tenant to take a 10 year lease.
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Property and transaction data: CoStar Research.