Wolf Capital Partners buys medical office building in the Heights
A 120,000-square-foot medical office building in the Heights has traded hands.
Houston-based Wolf Capital Partners paid an undisclosed amount to acquire Heights Medical Tower at 427 W. 20th St. Harris County Appraisal District records said the building was valued at $786,000 as of Jan. 1, 2021.
Wolf Capital Partners said it plans to rebrand the building as HeightsMED and launch an extensive update of the property.
The renovations will include a new lobby, elevator cabs, restrooms, MEP systems and spec suites.
Exterior upgrades include a refreshed streetscape and widened sidewalks, to create more walkability and better access to nearby retail, food and beverage businesses.
The renovations are expected to begin in mid-2022 with an estimated completion by mid-2023.
One of the key selling points of the building was a connected parking garage, which Wolf Capital Partners said was a big advantage in an area that is often parking constrained.
“The repositioning of HeightsMED provides an excellent opportunity to transform a well-located medical office building with great bones into a best-in-class facility in a neighborhood where there is a massive void for health care services,” said Zach Wolf, principal at Wolf Capital Partners. Wolf left Houston-based Braun Enterprises in 2019 to start Wolf Capital Partners.
Transwestern Real Estate Services’ Justin Brasell and Christian Connell have been tapped to provide agency leasing services for the property.
Anthony Heins of Heins Properties represented Wolf Capital Partners in the acquisition. Matthew Putterman, a managing director of JLL, secured financing from Origin Bank on behalf of Wolf Capital Partners.
“HeightsMED benefits from the neighborhood’s strong payer mix and high income,” said Brasell, an executive vice president and managing director of health care advisory services at Transwestern. “Barriers to entry in the Heights are extremely high given the submarket’s very limited supply of quality medical office space. HeightsMED is an excellent opportunity for specialty practices seeking reasonably priced Class A space in an in-demand submarket.”
Demand for medical office space in and around Houston has been on the rise in recent years as a growing number of patients seek out physicians with offices closer to their homes. Developers have rushed to keep up by building more medical office buildings closer to residential neighborhoods.
A recent report by Houston-based NAI Partners found that the average asking full-service price per square foot among medical office buildings jumped 3.1% year over year in January, putting it at $26.22. At the higher end of the market, buildings that qualify as Class A properties, the average asking rent stood at $31.06 per square foot in January.
NAI Partners reported that one month into 2022, medical office buildings have recorded about 158,000 square feet of leasing activity, when taking into account both new leases and renewals. In all, Houston saw the market absorb about 149,000 square feet of medical office space in January, the report said.
Despite the increased demand for medical office space, the vacancy rate among the city’s medical office properties remained at 16.6%, unchanged compared to January 2021, which NAI Partners attributed to new developments adding to the overall supply.