Medical office building with stable tenants a winning combination for buyer
/By Laurie Schreiber, Senior Writer at MaineBiz
The buyer of a medical office building in the Stroudwater area of Portland was attracted to the prospect of Maine Medical Partners Dermatology as a long-term tenant and also views medical space as a stable asset. (Direct link to Mainebiz article)
COURTESY/NAI THE DUNHAM GROUP
A medical office building in the Stroudwater area of Portland sold for $4.23 million.
Northland Enterprises of Portland bought 1601 Congress St. from OGH Realty LLP for $4.23 million. Sam LeGeyt and TC Haffenreffer from NAI The Dunham Group brokered the sale, which closed March 3. The property, on outer Congress Street, comprises a 29,000-square-foot office building on 12.1 acres.
Maine Medical Partners Dermatology will start renovations to the first floor and plans to occupy the 10,000-square-foot space by early summer, according to a news release. The new tenant-landlord partnership is what made the purchase of the building viable for Northland, which wanted a long-term tenant for the first-floor.
The remainder of the building is occupied by Saco Bay Orthopaedic & Sports Physical Therapy, Southern Maine Pediatric Dentistry, Dr. David R. Kerr DDS, and Adult & Pediatric Orthodontics. A 1,133-square foot medical office suite will be available for lease later in 2021.
Immediate inquiries
The seller, OGH Realty Associates, is a local group of doctors who were all partners of Maine Orthopedic Center, LeGeyt told Mainebiz via email. “This group of doctors built this building in 1992 for their own use,” LeGeyt continued. “They added onto the building in the early 2000s for more space for themselves and other tenants.” The 10,000-square-foot space was occupied by Maine Orthopedic Center until recently.
Maine Ortho, as it’s known, merged with Spectrum Healthcare Partners in the last few years and, in late 2020, moved to Spectrum’s existing offices on Sewall Street in Portland, LeGeyt explained. The property went on the market in 2020, both for sale and for the lease of the 10,000-square-foot space. The property received immediate interest. The lease space received mostly local interest and sale inquiries came from investors across the country. “It’s a very well located property for medical tenants with great proximity to the highway and local hospitals,” LeGeyt continued. “It also abuts and includes a portion of the Portland Trail network to the Fore River Sanctuary.”
Hidden gem
The purchase represents continued growth for Northland, a commercial real estate developer and property owner headed by CEO and partner Josh Benthien and founder Rex Bell. Its commercial portfolio of build-to-suit projects, renovations and historic restorations includes medical facilities, manufacturing facilities and warehouses, retail locations, restaurants, universities and professional offices. Benthien said 1601 Congress was appealing due to the high quality of the tenants and the stability that the medical office asset class offers. In-person medical services are at least partially insulated from the more drastic office closures that other industries have experienced, he added.
“That section of the outer Congress Street corridor is ideally suited for medical services, because it is very convenient to many neighborhoods in Portland, South Portland, Scarborough and Westbrook,” Benthien said in the release. “We are still dealing with COVID, but it is important for people to have the option of being able to see their doctor or dentist in person: I am grateful that my two children have continued to be able to see Dr. Wignall at Southern Maine Pediatric Dentistry throughout the pandemic.”
Benthien told Mainebiz he was familiar with the building through his children’s appointments. “It’s kind of a hidden gem behind the trees,” he said. “Even though I’d been in it, I didn’t have a clear understanding of the value of the building.” Haffenreffer brought it to him as a potential opportunity. “The strength of the tenants was really attractive,” Benthien said. Maine Medical Partners’ interest in the 10,000-square-foot suite increased his interest, he added. The deal was financed through Bangor Savings Bank.
Benthien said he viewed medical space as being a relatively stable asset with a customer base of high-quality tenants. “Despite telemedicine, we all need to go to the dentist and to the doctor,” he said. The building is in excellent condition, he said. Incremental improvements to the building are likely on the horizon. That could include adding signage to improve visibility from the road. “It’s about beautifying, making it a little easier to find,” he said. The grounds in the back of the building are overgrown and could use some attention, he added.
Haffenreffer, who represented Northland, said Northland’s previous experience in the Stroudwater neighborhood was a plus. “A couple of years ago, Northland did a beautiful job developing a build-to-suit solution for Clark Insurance and Diversified Partners on the site of the Elks Club, just across the street from the airport entrance,” he said. “I am confident that they will bring the same energy and vision to continue to improve the experience of tenants and visitors at 1601 Congress St.”
