Montecito Medical Real Estate has shelled out roughly $32.3 million for a fully leased medical office building in Gilbert, a splashy move that highlights just how hungry investors are for outpatient healthcare space in the East Valley. The OrthoArizona facility is a two-story surgery center and clinic of roughly 49,000 to 50,000 square feet just south of Mercy Gilbert Medical Center, and it will stay occupied by OrthoArizona under its existing leases. The deal ranks among metro Phoenix’s largest commercial real estate transactions for March.
Deal details
According to Bisnow, Montecito bought the property at 1675 E. Melrose St. from Sphere Investments for about $32.3 million, with Newmark brokering the sale. The building clocks in at just under 50,000 square feet and was 100% leased to OrthoArizona at closing.
The building’s backstory
Commercial Property Executive reported that the facility opened in spring 2019 and changed hands in 2021 for roughly $23.6 million. The two-story asset houses OrthoArizona’s outpatient services along with an on-site ambulatory surgery center operated in partnership with United Surgical Partners, a pairing that helped draw investor interest early on.
Why investors are paying up
A CBRE brief found that completions of new medical outpatient buildings are expected to fall about 26% in 2026, which would tighten supply and boost the value of stabilized MOBs. Montecito, which says it has completed more than $6.5 billion in medical and veterinary real estate transactions, has been actively adding surgery centers and other MOBs this year, according to Montecito Medical.
“It’s certainly reflective of an approach from LP investors focusing on necessary real estate, the assets that society needs in terms of its functionality,” Justin Shepherd, Newmark vice chairman and co-head of healthcare capital markets, told Bisnow. Shepherd noted that specialized requirements for surgical suites and high-power HVAC systems can make ground-up MOB development comparatively costly, which nudges buyers toward existing, income-producing properties…