Sutter Health buys 12-acre life sciences campus in Emeryville for $450M

Sutter Health bought a 12-acre life sciences campus in Emeryville for $450 million, which it plans to redevelop into a 1.3 million-square-foot hospital and medical center.

The Sacramento-based health care firm bought the 530,000-square-foot campus and a couple of vacant lots at 53rd and Horton streets, the San Francisco Business Times and Fierce Healthcare reported.

The seller of the two research buildings and lots was Blackstone’s BioMed Realty, based in San Diego. The deal works out to $615 per square foot.

In all, Sutter made seven real estate purchases to amass the dozen acres that will make up its Sutter Emeryville Campus, a $1 billion hospital and medical center expansion into the East Bay.

The nonprofit health care system paid $170 million for the building at 5555 Hollis Street and $156 million for the building at 5300 Chiron Way. Biomed renovated the offices on Chiron Way, once home to Zymergen, a defunct biotech firm, then built the offices on Hollis next door.

It bought a nearly 2,000 car parking garage. And it paid $90 million for vacant land at 4563 Horton Street and $18 million on an empty lot at 1400 53rd Street, the site for its future hospital.

Plans by Sutter Health call for building a 335,000-square-foot hospital with up to 200 beds, and redeveloping the life sciences buildings for 530,000 square feet of outpatient services, according to Fierce. The proposal leaves room for expansion.

The hospital would include labor and delivery, surgical services, intensive care, emergency care and neonatal intensive care.

The medical flagship, to harbor such specialties as imaging and laboratory services, expects to welcome its first patients as early as 2028, Sutter said. The hospital would open between 2032 and 2033.

Sutter Health owns 21 hospitals across Northern California, according to its website. In December, a consortium led by Sutter joined forces to build an $800 million pair of medical campuses containing 1 million square feet in Santa Clara.

“Our Emeryville campus project represents one of the most significant investments we’re making across our system over the next decade and is part of our broader vision to meet the community’s growing demand for expanded access to our services across the East Bay footprint,” Warner Thomas, CEO of Sutter Health, said in a statement.

BioMed Realty once had big plans for Emery Yards, originally planned to be a 1-million-square foot life sciences office and research campus. But after building its first phase, the developer appears to have cashed in on a slumping market.

Laboratory vacancy in Emeryville hit 39 percent in the third quarter, the highest of any city in the East Bay, which had an average vacancy of 14.1 percent, according to CBRE.

— Dana Bartholomew