HealthNow HQ Trades for $84.5M

January 14, 2011
By Barbra Murray, Contributing Editor

The 430,500 square-foot corporate headquarters of HealthNow New York Inc. comes under new ownership, courtesy of a transaction valued at $84.5 million. Cole Real Estate Investments snapped up the premier office asset from Duke Realty Corp., which had developed the two-building campus as a build-to-suit for the healthcare company in 2008 for $102 million.

HealthNow’s headquarters occupies a nine-acre parcel of land that had been a contaminated brownfield site before Duke commenced construction of the build-to-suit. The property consists of a seven-story tower and eight-story tower connected by a seven-story atrium. The buildings, designed by architect Steven Risting, feature the stone façade of the historic 1850’s-era structures that were once home to Buffalo Gas Light Co. The HealthNow campus, which includes a six-story 1,500-space parking facility linked to the office buildings by a bridge, is LEED Silver-certified by the U.S. Green Building Council.

Commercial real estate services firm Jones Lang LaSalle, acting through its Healthcare Capital Markets division, represented Duke in the transaction, while Cole relied on internal representation. “There was strong interest in the property considering that it’s in a secondary market, but because of the high-quality of the construction and the investment-grade tenant with a long-term lease, it did garner a lot of interest,” Joseph Garibaldi, managing director with JLL, told CPE. HealthNow will continue to call the property home under a lease agreement scheduled to expire in 2024; however, the lease does allow for four five-year renewals.

In terms of the sale price for the HealthNow campus, Garibaldi believes Duke got a good deal. “It was extremely aggressive pricing given the time we traded.” In general, sales activity in secondary markets is on the upswing, he added. “We do see a pickup. A lot of investors have been getting priced out of primary markets, but with properties like the HealthNow headquarters in secondary markets, they’re able to come in and get-risk adjusted returns because of the construction quality and the tenancy.”