North Shore Orthopedics has purchased this 50,000-square-foot office building in Peabody for $5.5 million. The company, which plans at least $4 million in renovations, will transform the site into one of the state’s first ambulatory surgical centers.
North Shore Orthopedics last week acquired a 50,000-square-foot medical office building at the North Shore Mall in Peabody for $5.5 million. The company plans at least $4 million in renovations, transforming the facility into one of the state’s first ambulatory surgical centers and augmenting a burgeoning medical market in the region.
The building will include a spine and orthopedic center, a cadaver training lab, a surgical center, MRI facilities and physical therapy. Sports Medicine North will relocate its Lynnfield office once to the facility once renovations are complete and serve as the anchor tenant of the building. The site, adjacent to the world-renowned Lahey Clinic Northshore and Macy’s, formerly housed offices for Blue Cross/Blue Shield.
Trammell Crow Co.’s Brian Hines, principal, Michael Dalton, vice president, and Debbie Howerton, senior associate, represented the seller, CHS Limited Partnership and the buyer, North Shore Orthopedics, in the transaction.
The transaction required the termination of two subleases with Blue Cross/Blue Shield and Caremark, a separate business that also occupied the building. The deal also involved the termination of a ground sublease and an extension of the master ground lease with Simon Cos., owners of the North Shore Mall.
New Niche
Developers will begin renovations during the first week of September, with plans for an office opening in December and the opening of its surgical centers in January. When it opens, the Sports Medicine North complex will be one of five medical facilities in Peabody, part of what some industry watchers say is a growing niche market on the North Shore.
“It’s [medical facilities] a niche that continues to grow and it’s a consistent user of office space,” Dalton said. While vacancy rates remain high throughout the state and demand low, the medical office front breaks through those hindrances, according to Dalton.
And Peabody keeps attracting them.
“We’re there for the same reasons a lot of other people are there, it’s a terrific location, it’s accessible by public transportation and it’s within a half-hour drive from almost everywhere,” said John M. Powell, managing principal of North Shore Orthopedics, the company formed by Powell and Dr. Jeffrey Polansky to develop the property. “There’s been a natural evolution. there wasn’t a deliberate movement organized, it just seems to be a good place [for medical space users] to go.”
While Polansky was searching for a new home for the Lynnfield Sports Medicine North, Peabody naturally caught his eye, not only because of its location at the junction of Interstate 95 and Route 128 but also because of its proximity to Boston and dozens of other communities along the North Shore. Polansky expects that business will increase between 30 and 40 percent as a result of the move.
The city itself, anxious to expand its medical facility base, offered North Shore Orthopedics below-market, low-interest loans through the city’s Community Development Authority’s Revolving Loan Fund. The city’s initiative helped with gap financing. Peabody’s willingness to offer project support and its business-friendly permit system was also a major part of the company’s decision to relocate, according to Polansky.
The Sports Medicine North complex follows several other medical expansions in Peabody. In the past year and a half, Lahey Clinic added a 6,000-square-foot MRI wing, the North Shore Cancer Center upgraded its facilities and the city also helped a group of doctors consolidate and expand its industrial park offices.
“It’s definitely a trend and we’re happy to see it,” said Joseph Viola, Peabody’s city planner. “It broadens the tax base, brings jobs and further establishes Peabody as a medical hub. Peabody is a service location as far as restaurants and retail goes, now we’re moving on to medical.”
The center’s development breaks new ground in Massachusetts. It’s one of the first ambulatory surgical centers in the state and one of the first, if not the only, center to specialize in orthopedic care, Polansky said. Ambulatory surgical centers have been popping up across the country but have been slow in establishing a presence in Massachusetts.
Surgical centers, which focus on outpatient care, increase efficiency and allow doctors to see more patients sooner, Polansky said. While some consumers are waiting six weeks or six months to see a doctor and then wait months more for additional tests before surgery, Polansky predicts that a patient at Sports Medicine North will be finished with the entire process in three to four weeks.
While the quick turn-around makes surgical centers popular with consumers, hospitals aren’t so happy when they move into the neighborhood.
“We’re hoping that this will be a win-win situation,” Polansky said. “It’s happening almost everywhere in the country but there’s always a battle between the hospitals and the centers. The hospital’s fear is that they’ll see a drop in outpatient surgery.”
Polansky called it a shortsighted view.
“Hospitals should partner rather than stop the process,” he said. “It’s also short-sighted because, if you can do the same or better care at a cheaper price, it’s better for people and the industry.”
Corporate in Canton
Trammell Crow also recenlty brokered the sale of Canton’s BlueView Corporate Center to DST Realty of Massachusetts. The 183,000-square-foot building was sold for $24.7 million.
The building will serve as a corporate headquarters of EquiServe, an affiliate of DST currently located in an adjacent property.
Richard J. Fahey of Trammell Crow represented DST Realty in the transaction.
BlueView Corporate Center is located on the former site of the Blue View Nursery at 250 Royall St. in Canton. National Development acquired the land in December 1999 and completed construction of the first class office building in September 2002.
National Development’s decision to sell the building in a challenging leasing market resulted in a sale price of $135 per square foot. Ted Tye, managing partner of National Development, said the price is one of the highest among comparable transactions this year in the Route 128 market.
