CHICAGO (May 6, 2025)—The partnership between Capital Healthcare Properties and HSG Medical has completed the opportunistic acquisition of a free standing medical/retail (“medtail”) property within a key Lombard trade corridor. Immediately upon acquisition, the partnership executed a long-term lease with Duly Health and Care that brings the property from 33% leased to 100% leased.
default
The financial terms of the acquisition and lease transactions were not disclosed. The asset was sold by a Special Servicer who was represented by Frontline Real Estate Partners.
Capital Healthcare and HSG Medical acquired the 21,070-square-foot building located at 2830 S. Highland Avenue at the highly trafficked intersection of Highland Avenue and Butterfield Road. That location puts it within one of Chicagoland’s strongest, demographically rich submarkets, with proximity to Yorktown Center and Oak Brook Mall.
The Lombard submarket and demographics were very appealing to Duly Health and Care and resulted in the execution of a long-term lease for 14,118 square feet of space. The property exhibits excellent fundamentals for Duly’s growing practice: size, accessibility, immediate availability, and prominent signage. The asset also features several small-shop retail tenants including Potbelly’s restaurant and SimonMed Imaging.
“Unanchored retail centers have become highly sought after by real estate investors primarily because of their defensibility against e-commerce and other factors, including decreasing supply.” said Daniel Ahlering, Principal, Capital Healthcare Properties. “The in-demand nature of the asset profile combined with the strong medical tenancy give us the conviction that when fully occupied, the property will be comparable to the highest quality medtail buildings in the region.”
Capital Healthcare and HSG Medical will make significant base building and property upgrades, including a new parking lot, new roof, enhanced front sidewalks, exterior tuckpointing and landscaping. Concurrently, Duly will expand it’s high-quality, affordable multi-specialty services, including dermatology, at this location.
Duly Health and Care is one of Chicagoland’s premier healthcare providers with a dominate position within the DuPage County healthcare landscape. The practice has more than 1,200 primary care and specialty providers across 50+ specialties, 150 locations and serves over 2.5 million patients every year.
“We are excited to expand our development portfolio with 2830 Highland and are thrilled to partner with Duly Health and Care,” said Kage Brown, Managing Partner, HSG Medical. “As the cost of new construction continues to rise, we are focused on finding strategic healthcare opportunities within existing buildings, positioning us to meet growing demand in the outpatient sector while achieving significant value through adaptive re-use.”
The healthcare real estate market continues to experience tremendous growth, with medical outpatient building absorption accelerating in Q4 2024, up 15% year-over-year. Additionally, the retail vacancy rate is also near record lows at 4.1%.
“Despite the relative strengths in the medical and retail sectors, there still remains distressed opportunities in the real estate market,” said Kage Brown, Managing Partner, HSG Medical. “We were able to acquire this asset at an attractive basis with a tenant in tow, making it a perfect fit for the HSG Medical and Capital Healthcare partnership. In a short period, our team has built an impressive medical portfolio totaling nearly 150,000 square feet and valued at over $50 million – and we are aggressively growing our pipeline.”
Brown added that with an increasing share of healthcare services expected to shift to outpatient settings by 2026, the partnership remains focused on adaptive re-use opportunities that allow them to provide healthcare partners with the best possible economics, while delivering finished space 12-24 months faster than traditional new construction.
The Property was put under the control of a special servicing agent after the previous owner defaulted on its loan. The special servicer, with no long-term ownership aspirations, put the Property on the market at the beginning of the year. Given the general demand for medtail space within a market area that is demographically rich, Capital Healthcare and HSG Medical aggressively pursued the acquisition opportunity to capture the potential arbitrage of acquiring a distressed asset and leasing it quickly.
The medtail asset offers an ideal location with excellent patient and customer convenience, benefiting from easy access off I-88 and proximity to popular retail amenities including the adjacent Yorktown Center.
“We are excited and fortunate to partner with Duly’s leadership and real estate team on this important site, supporting their continued expansion in the Chicagoland market,” said Jay Heald, Principal, Capital Healthcare Properties. “Our partnership with HSG Medical is committed to bringing convenient, high-quality care to premier locations through strategic development and thoughtful partnerships with providers.”
# # #
About HSG Medical
HSG Medical, an affiliate of Chicago-based Hubbard Street Group, is led exclusively by John McLinden and Kage Brown. The principals of HSG Medical bring over 45 years of combined national real estate development experience and have developed over 12.5 million square feet and 5,000+ residential units, exceeding $3 Billion in aggregate capitalization for these projects.
About Capital Healthcare Properties
Capital Healthcare Properties is a national, Chicago-based commercial real estate firm focused on the acquisition, development, leasing and repositioning of medical buildings for leading healthcare systems, physician groups and specialty providers. The firm’s founding principals, Daniel Ahlering, Jack Sullivan and Jay Heald, each have more than a decade of experience in the acquisition, development and leasing of commercial real estate, with recent involvement in MOB development, and related assignments, totaling more than one million square feet and ranging in size from 20,000 to 180,000 square feet. Throughout their careers, the principals have been involved in transaction and development activity exceeding $3 billion in aggregate capitalization.
About Duly Health and Care
The Duly Health and Care brand consists of some of the largest independent, multi-specialty, physician-directed medical groups in the nation, with more than 1,200 primary care and specialty care providers and over 6,000 team members across more than 150 locations. The Duly Health and Care brand includes three medical groups — DuPage Medical Group Ltd., Quincy Medical Group, and The South Bend Clinic LLC. Duly is deeply committed to caring for patients in traditional and value-based care arrangements, ensuring a focus on quality, efficiency, and enhanced patient experiences throughout the Midwest. For more information, visit dulyhealthandcare.com.
The full content of this article is only available to paid subscribers. If you are an active subscriber, please log in. To subscribe, please click here: SUBSCRIBE
