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Atlanta Medical Office Developer Seeks to Strike Gold Again

Gipson Co. Files to Build Second Brookhaven Building After Selling First for Record Price
July 9, 2018
Credit: Tony Wilbert of The CoStar Group.

An Atlanta developer that recently sold a small Brookhaven medical office building for a record price to a Dallas healthcare real estate company, has filed plans in the hopes of doing it again.

The Gipson Co., which built a medical office building in 2016 at 3925 Peachtree Road with long-time Atlanta developer G.H. Anderson, has asked the city of Brookhaven for variances - a request to deviate from current zoning requirements - to develop a second medical office building next door at 3929 Peachtree. The second medical office building would be similar in size and look to Brookhaven Medical Center, a three-story, 48,588-square-foot building anchored by Piedmont Healthcare and home to a Walgreens location.

Demand for medical office space continues to rise in metro Atlanta and across the country as the population ages and hospitals and healthcare systems look for ways to better serve patients with more outlets off of main campuses. As a result, urgent-care facilities and outpatient centers are popping up across metro areas. "By year-end 2018, a full 73 percent of MOB (medical office building) construction projects underway will be built in off-campus locations," according to the JLL Healthcare Real Estate Outlook from global commercial real estate services firm, Jones Lang LaSalle.

While people over 65 still see doctors more often than any other demographic, millennials are impacting the healthcare real estate market as well. "They don't want a one-size-fits-all hospital campus," the JLL report said. "They want more convenient locations with smaller, more-concentrated offerings at convenient times."

Gipson and Anderson hope to avoid the contentious entitlement process it endured for Brookhaven Medical Center. That zoning process lasted several years as residents of the newly created city of Brookhaven battled the developers' request for several variances at what Gipson called Brookhaven's "front door." The site is just north of Atlanta's city limits on Peachtree Road.

This time, Gipson and Anderson are requesting two variances to Brookhaven's overlay zoning. They would like to increase the allowed width of a curb cut on Peachtree from 24 feet to 30 feet and reduce the amount of open space required by zoning law.

Anderson's Brookhaven Medical Building Partners II LLC acquired the 1.6-acre lot in 2017 for $3.5 million, according to CoStar research. The site still contains the carcass of a shuttered Subway store that is surrounded by trees.

"When we purchased the property for redevelopment, we worked to design a plan similar to the Piedmont building we had just completed next door," Gipson wrote in his Letter of Intent filed last month with his firm's rezoning application. "We were keeping a classic architectural design that would blend the two developments into a turn of the century classical style and set a standard that the city and residents would appreciate."

In February, the G.H. Anderson/Gipson joint venture sold Brookhaven Medical Center to Caddis Healthcare Real Estate of Dallas for $27.64 million, or $568.86 a foot - a record for Atlanta office sales based on its price per square foot.

The Brookhaven Board of Zoning Appeals is expected to consider Gipson Co.'s application at its July 18 meeting.

Tony Wilbert, Atlanta Market Reporter  CoStar Group   
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