$22/foot: Hospital campus sold for just $6.5 million
The soon-to-vacated North Downtown campus of Martha Jefferson Hospital has been sold to the developer of the Gleason condo complex with a price–- $6.5 million–- that appears smaller than other downtown deals. But a pair of local investors don't smell any sweetheart dealing.
"It does sound cheap," says realtor Roger Voisinet. "But on the other hand, there are some daunting expenses to convert it."
Voisinet notes that making it an assisted-living facility would probably entail the lowest conversion cost, but he wasn't sure whether there's a market for another one of those in town. And Developer Richard Spurzem notes that just holding such a mammoth place can chew up resources.
"It's a huge amount of land," says Spurzem. "You gotta heat it and keep security when it's vacant."
The buyer, Octagon Partners, appears to be getting 8.113 acres of land holding a whopping 291,134 square feet of structures–- including a 77,644 square-foot parking garage. Several houses along Lexington and Locust Avenues, part of the original offering, appear to have been withheld from the transaction, which reportedly closed September 23.
The sales price of $6.5 million computes to just $22.33 per square foot, one of the lowest–- if not the very lowest–- prices for finished space in recent Charlottesville history. Still, the city values the site at $42.5 million, even if it didn't charge tax.
"That was tax-exempt up until yesterday," says Charlottesville Assessor Roosevelt Barbour in a day-after-the-sale telephone interview. "Hospitals are tax-exempt."
In 2007, several years after announcing that it would leave the city to an 88-acre site at Peter Jefferson Place office park in Albemarle, the Hospital began inviting proposals from developers and formally issued a request for proposals last year. A previously announced development firm bailed out earlier this year.
Besides developing the Gleason, the largest non-UVA building ever built in Charlottesville, buyer Octagon Partners rehabbed the former Hardware Store restaurant building and has another historic rehab project underway at an old school in Staunton.
"We love downtown buildings and we love rehabs," says Octagon principal J.P. Williamson. "And I was born in that building."
The Hospital–- currently constructing its new 500,000 square foot, $275 million headquarters–- will occupy the current facility until the new one is completed in 2011 with the site turned over to Octagon no later than January 1, 2012, according to a release.
"I think it's good for Martha Jefferson, and hopefully it'll work out for Octagon," says Spurzem.
–updated 3:51pm Friday with information on the tax status and the quotations from the assessor
–updated 4:18pm Friday with quote from Williamson