Market for medical office buildings 'red hot'

The Tides Medical Arts Building was completed in 2007 on Wingo Way in Mount Pleasant.

Medical office buildings are suddenly a hot ticket in the Charleston market.

The 69,000-square-foot Tides Medical Arts Building at 180 Wingo Way in Mount Pleasant changed hands Thursday for $24.75 million.

That followed the recent sale of the 65,000-square-foot Roper Medical Plaza, an outpatient center at 325 Folly Road on James Island, which fetched $28.55 million, a record per-square-foot price for the Charleston area. The property sold for about $9 million more than what the seller paid about two years ago.

"The medical office market is red hot," said Scott Rogers, an investment sales specialist with the commercial real estate firm Colliers International, which tracks medical office sales throughout the region.

The reason: the huge chunk of the mammoth baby boomer generation is approaching 70 and more medical care will be needed as people age.

"It's a great product for investors to buy into," Rogers said. "It provides security and safety and durability of income that investors are looking for. Lenders also love it, so it makes it even more readily available."

Another reason sales prices are so high in the Charleston area is because there are not a lot of privately owned medical offices in the market, Rogers said. That tends to drive up the price, too.

"Charleston is a great market to invest in, and it's a highly sought-after product in a highly sought-after market," he said.

Josh Schaap with KW Commercial echoed Rogers' remarks.

"There is fierce buying competition right now for medical office buildings," said Schaap, who brokered the Tides Medical Arts deal and specializes in sales of medical office properties.

The Tides building, previously owned by several local physician partners under the name Johnnie Dodds Boulevard LLC, was completed in 2007 on 3.8 acres near the foot of the Ravenel Bridge. It sold for nearly $359 per square foot to Scottsdale, Ariz.-based Healthcare Trust of America Inc.

The Roper-occupied Folly Road property, previously owned by a group affiliated with The Sanders Trust of Alabama, sold for $437 per square foot to Health Care REIT of Toledo, Ohio.

Schaap said investor interest isn't likely to slow down.

"Charleston, with its continued market growth and world-renowned health care institutions, will remain a top target list for new real estate acquisitions for Healthcare Trust of America and the like," he said.

John McDermott of The Post and Courier contributed to this report. Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.