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Children’s National sells Shaw clinic building for $4.7M in push to expand

The building at 2220 11th St. NW had belonged to the organization since before the hospital moved to Michigan Avenue NW in 1977. – COSTAR

Key story highlights:

  • Children’s National Health System has sold its Shaw clinic for $4.7 million to Chevy Chase-based Boundary Cos.
  • The pediatric health system plans to shut down the Shaw and Adams Morgan clinics around the end of 2019 and move to a new space in Columbia Heights.
  • Children’s is in the process of getting a certificate of need for Columbia Heights space, after which construction can begin.

Children’s National Health System has sold its Shaw clinic for $4.7 million, part of a larger growth strategy that involves a new Columbia Heights ambulatory clinic and other new centers throughout the region.

The building at 2220 11th St. NW, one of six health centers the D.C.-based pediatric health system operates in the District, sold to an affiliate of Chevy Chase-based Boundary Cos. in a deal that closed June 14, according to deed records.

The building had belonged to the organization since before the main hospital moved to Michigan Avenue NW in 1977, and had served as the hospital’s first outpatient clinic years ago. Decades later, “it is not in great shape,” said Charles Weinstein, executive vice president and chief real estate and facilities officer for Children’s National.

“We think the sale of the building just made sense, given its age and given the changing demographic of that neighborhood, which is becoming much more residential,” he said.

Children’s National, which has signed a lease with the new owner, will continue to run out of this location for now, according to Boundary President John Wilkinson.

“It’s a great piece of real estate,” Wilkinson said, adding, “we’re viewing this as a long-term hold with optionality.”

Children’s expects to stay operational at the Shaw site through the end of 2019 or early 2020. At that point, the clinic will shut down and services offered there — physical exams, immunizations, treatment for illnesses, nutritional counseling,Medicaid application assistance and others— will move to a new space in Columbia Heights.

That new tenant space, in an existing building at 3336 14th St. NW, will provide 10,000 square feet. The health system is in the process of getting a “certificate of need,” a regulatory approval for major health investments required in D.C. Construction will begin once the CON is issued, according to Weinstein.

Children’s National will also shut down its Adams Morgan outpatient clinic and move its services to Columbia Heights whenever that site is ready, according to Matthew Coursen, managing director in JLL’s D.C. office, who represented Children’s in the transaction. The team is shooting to move forward with the consolidation at the end of 2019, and has extended the lease it holds in Adams Morgan to align with that timeline, he said.

The future Columbia Heights site — two blocks from the Columbia Heights Metro station — represents the health system’s effort to both consolidate duplicative services and “make access much easier for our patients and families,” Weinstein said.  Children’s also has health centers in Anacostia (2101 Martin Luther King Jr. Ave. SE) and at THEARC (1901 Mississippi Ave. SE), in addition to the main hospital.

Children’s continues to take steps to expand its outpatient primary care and specialty locations across the region. It has several sites under development in and around Washington, including:

  • Leasing a 33,000-square-foot space at The Wonder Bread Factory in Shaw, where it will move much of its primary care clinic services and associated faculty offices. This location, less than a mile from the Shaw clinic it just sold, will provide greater access to a more comprehensive list of services than the smaller neighborhood clinics, according to Children’s.
  • Leasing the historic 23,000-square-footTakoma Theatre building, where it will move its behavioral medicine, autism, hearing and speech, and developmental medicine programs.
  • Moving the Goldberg Center, the hospital’s primary care clinic, to its Walter Reed Campus, where CEO Dr. Kurt Newman said he wants Children’s to be a “catalyst for innovation.” That new pediatric primary care location is slated to open in 2020.
  • Opening a 60,000-square-foot clinic at Woodmore Towne Centre in Prince George’s County, to serve as both an outpatient center and ambulatory surgical center with two operating rooms, slated for 2020. That project broke ground in December.

Children’s isn’t the only health care player making moves in Greater Washington real estate. Another to keep an eye on is Kaiser Permanente of the Mid-Atlantic States, which earlier this month added two Virginia medical buildings to its growing footprint — just the latest in a string of activity for the Kaiser Permanente affiliate.

 

Originally published: Washington Business Journal, June 21, 2018, by: Sara Gilgore, Staff Reporter

https://www.bizjournals.com/washington/news/2018/06/21/children-s-national-sells-shaw-clinic-building-for.html

 

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