Santa Monica Medical Plaza

Client Name: Golden West Properties
Building Name: Santa Monica Medical Plaza
Location: 1260 15th Street, Santa Monica, CA 90404
Square Footage: 86,607 SF
Type Building: Medical Office Building

This building is a 14 story, 87,607 square foot medical office building located in Santa Monica, California. The building was built in 1971 and has approximately 40 tenants. We have managed the building for two different owners a doctor partnership from 1996 to 2004, and a real estate investment company from 2004 to present. The building has been well leased (currently 94%) during the entire time that we have managed the building.

What were we hired to do?
We were hired to provide property management, leasing and construction management.

Why were we hired?
We were hired because the general partner doctors recognized that the building needed professional property management, and wanted to improve the level of maintenance via a capital improvement campaign to update the building so occupancy at the building would remain high.

What were the problems with the property?
The building was managed in-house by the doctor partnership (who developed the building) until we began managing the building in 1996. The building was dated and had significant deferred maintenance. Common area maintenance expenses to be billed to tenants as specified in the leases were never billed.

What did we do to solve the problems?
We performed a thorough inspection of the building and identified all of the items that needed to be addressed. We placed a new on-site engineer at the property and hired vendors as required to handle the deferred maintenance at the building. In 1998, we supervised the remodeling of all of the common area corridors and the ground floor lobby. We reviewed the books and put together common area maintenance charges and billed tenants for past due charges. Additionally, in 2004 when the new owner purchased the building, we embarked on a structural upgrade of the building with tenants remaining in place. The primary reason for the structural upgrade was to raise the building from a poor rating to a fair rating according to the UCLA criteria for structural integrity of buildings. This allowed UCLA to renew leases and lease additional space in the building.

Did we do anything particularly innovative?
In 1998 we worked with the leasing broker to close off the ground floor entrance to the south side of the building and reconfigured the ground floor to accommodate a kidney dialysis group that needed a ground floor contiguous space in an area that had been leased by several tenants. This required several meetings and ultimate approval from the City of Santa Monica in order to consolidate the space. We also terminated the reliance for HVAC to the building from the hospital across the street by installing HVAC equipment on the roof of the building. This required structural support on the top floor of the building to support the equipment.  Additionally, UCLA required that the building meet current state seismic standards.  The ownership and Morlin commenced an engineering and feasibility study to determine the specifics of the UCLA structural requirements and then proceeded with a structural retrofit of the building. The retrofit was completed over a three and one-half year period.  All seismic requirements were met or exceeded resulting in the only currently seismically retrofitted and compliant building in Santa Monica.  The end result was the renewal of all leases by UCLA, and leasing of an additional 6,000 square feet in newly created space in the parking structure of the building including a portion of the space for a UCLA MRI unit.

We were able to add rentable square footage to the building due to above code parking that was built during original construction.  The square footage of the building increased from approximately 80,000 square feet to 86,000 square feet.

Retrofits of the building energy management system are currently on-going, but have already resulted in reductions of operating and utility costs in the building.

The upgrades to the building have resulted in rental rates at the top of the Santa Monica market, lower operating expenses, and continued high demand for the space.

Did the client expand the relationship with us as a result of our work?

Yes.  We currently handle six additional buildings for this client.

Skills:  Case Study

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Morlin Asset Management, LP | Santa Monica Medical Plaza