Project · Property

An underperforming medical centre, repositioned

Chronic vacancy, deferred maintenance and a drifting tenant mix — rebuilt into an anchor-led medical destination held for the long term.

Asset Multi-tenanted medical centre Location Outer Melbourne growth corridor, VIC Year 2022 — 2023 Disciplines Property · Asset management · Operations

The brief

A neighbourhood medical centre in a growth corridor was being sold with roughly a third of its lettable space vacant, an aging building and a tenant mix that had drifted over several years of absentee ownership. We underwrote it based on the centre serving a growing catchment, with no competing purpose-built medical facility planned nearby.

The difficulty

The building needed work before it could win good tenancies: deferred maintenance across plant and common areas, a dated patient environment, and consulting rooms whose configuration no longer matched how the area's practices worked. At the same time, the anchor general practice was reviewing its options, and prospective allied health tenants were touring the building. Capital works, anchor retention and new tenancy interest had to move together.

What we did

We began with the anchor. Before settlement, we agreed a lease renewal and expansion with the general practice, giving the centre a clinical foundation for the next decade. We then sequenced the capital works to the tenancy strategy: common areas, waiting environment and consulting suite configurations were reworked first, because those were the spaces prospective tenants judged the building by.

The spaces prospective tenants judged the building by were reworked first.

Allied health and a pathology collection service were then recruited to complete the patient journey around the anchor practice. Deferred maintenance was cleared and converted into a funded preventive program.

Anchor practice, allied health and pathology in one building.

The outcome

The centre moved from a vacancy rate around thirty per cent to effective full occupancy, with the anchor practice committed long-term and a waiting list of credible operators for the suite configurations the repositioning created. Weighted lease term lengthened materially, income stabilised on multi-year commitments rather than rolling short tenancies, and the asset — maintained on a funded preventive program — has been held in our portfolio since.

30% to fullVacancy closed within the program period
10 yearsAnchor tenancy committed at renewal
Held sinceOwned, operated and reported as one asset from 2023

From the other side of the program

As the anchor practice we were sceptical about new ownership. Two years on, the centre works better than it ever did, and our renewal was the easiest negotiation we have had.

Principal GP — Anchor Practice, Outer Melbourne

The expertise behind this program is described in medical property investment. Read the next project, a surgical equipment portfolio, or talk to us about a property you hold.