Inova buys Willow Oaks medical campus from Stockdale for $97.5 million

Inova Health System bought the Willow Oaks Medical Campus in Fairfax, Virginia, for $97.5 million, or roughly $255 a square foot, taking 382,850 square feet in two buildings at 8260 and 8280 Willow Oaks Corporate Drive from Stockdale Capital Partners. Newmark arranged the sale, with co-heads of U.S. medical office capital markets Ben Appel, Jay Miele and Justin Shepherd leading the seller representation alongside healthcare debt head John Nero, senior managing director Michael Greeley and associate directors Ron Ott; executive managing directors Jud Ryan and James Cassidy of the D.C. capital markets group supported the transaction.

Each building spans approximately 188,000 square feet, and both sit in the Merrifield submarket adjacent to Inova's headquarters and Inova Fairfax Hospital, minutes from the Capital Beltway and the Dunn Loring-Merrifield Metro station and within reach of Tysons, Washington and the Mosaic District. A health system buying the offices beside its own hospital is underwriting physician recruitment, patient access and control of ground it already occupies, a different willingness to pay than an institutional landlord brings to the same two buildings.

Newmark included its head of healthcare debt on the seller team even though the coverage describes the transaction as an outright sale, and it does not say whether any financing was arranged alongside it.

Stockdale's side is thinner in the public account: the portfolio had received multi-million-dollar capital investment into tenant spaces, common areas and amenities in recent years, so the sale tests whether that spending showed up at exit. No basis, occupancy, lease terms or capitalization rate are disclosed, leaving the $97.5 million price as the only hard number on the trade.

Medical office has been the steadier corner of an office market that no longer has a single clearing price, and health-system credit is a large reason why: Inova carries a Moody's Aa2 rating. The $255 a foot here sits above the $111 a foot this publication reported for a Norfolk office building in August, though the comparison is not like-for-like—one is a hospital-adjacent campus bought by the health system next door, the other a sale in a different market. Willow Oaks gives owners in the Merrifield-to-Tysons corridor a fresh mark.

The next comparable sale in the submarket, to a buyer without a hospital next door, is the one that will price the asset class rather than the campus.