CHP and HSG successfully repurpose a former L.A. Fitness facility
By John B. Mugford
The Advocate Health Care Cardiovascular ASTC & Outpatient Center was sold directly to Advocate Health. (Photo courtesy of HSG)
As the costs of developing new healthcare real estate (HRE) facilities and medical outpatient buildings (MOBs) continue to soar, many developers and investors are looking at the possibility of repurposing other property types into medical.
It’s a great idea on the surface, many HRE professionals say, as a successful project can provide better speed to market and, in many cases, save costs.
However, as many HRE professionals also say, not every building out there can be repurposed to a medical facility, as many buildings do have medical, electrical and plumbing constraints, many do not meet the regulatory and code compliances to be converted to medical, many buildings do not have the correct floorplate sizes and proper ceiling heights, and, as is often the case, many buildings lack adequate parking and drop-off areas for patient, among a host of other reasons.
And yet, when a developer does find a conversion-worthy facility, as noted, such a project can prove to be quite successful.
That would indeed be the case with a repurposing project that opened in early 2026 in Naperville, Ill., a demographically strong, affluent western suburb of Chicago.
Back in the second half of 2024, a partnership of two Chicago-based firms, Capital Healthcare Properties (CHP) and HSG Medical, an affiliate of Hubbard Street Group, acquired a then-vacant, LA Fitness facility that is visible from and just off U.S. Interstate 88 in the mixed-use Freedom Commons area.
CHP and HSG bought the building and the 5.08-acre site for $7.5 million from a car dealership that had acquired the property in an earlier auction but had yet to open a business on the site. The partners then began converting the building into a medical facility for Downers Grove, Ill.-based Advocate Health Care, which operates 11 hospitals in Illinois and Indiana and is part of the larger, 69-hospital, Charlotte, N.C.-based Advocate Health.
Well, in late May, just six months or so after the health system opened the facility as its new Advocate Health Care Cardiovascular ASTC & Outpatient Center, which helped alleviate growing demand for such services, including outpatient surgery, that it was providing about 8 miles away at its 333-bed Advocate Good Samaritan Hospital in Downers Grove, the health system acquired the facility from the partnership of CHP-HSG.
According to data from Arnold, Md.-based RevistaMed, which provides a wide range of HRE statistics for its subscribers, the price was $23.4 million, or $551 per square foot (PSF).
The sale to the health system was not part of a ROFR, or right of first refusal, but came about because Advocate had made a “long-term commitment to this facility,” says Dan Ahlering, who along with Jay Heald and Jack Sullivan, the three managing partners, founded CHP in 2023.
“With what they put into the space and the high-acuity services they were offering there, with cardiac surgery, imaging, physician offices, and more, the health system decided to own the facility for the long-term. We approached them prior to formally marketing the building for sale, and we were able to make something work that really benefitted everyone involved.”
The project, it should be noted, was a finalist in the 2025 HREInsights Awards for Best Renovated or Repurposed Healthcare Facility.
For a longer version of this story, including how the project came about and the subsequent repurposing of the LA Fitness facility, please click here.
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