Seattle-based Group Health Cooperative says it has cancelled its lease agreement with the owner of the Quail Run Professional campus, where it planned to relocate its South Hill clinic, and now is looking for a new site.


Last June, Group Health agreed to lease 8,500 square feet of space in a 12,000-square-foot building that Dr. John Sonneland, of Spokane, is developing at 2204 E. 29th in Quail Run, which Sonneland owns. Since then, however, Group Health has been unable to reach an agreement with Sonneland on details related to the design of the building and features of the roughly 1-acre site, says Lloyd Guthrie, Group Healths district administrator for Eastern Washington and North Idaho.


The lease was cancelled because the owner and Group Health were unable to arrive at a final working plan for the site, Guthrie says. Were back to an open review of properties on the South Hill.


Group Health is looking for a roughly 8,500-square-foot space, preferably where it can be an anchor tenant in a larger building, Guthrie says. It expects to decide on a new location within a few months, he says.


Group Health currently operates its South Hill clinic in a roughly 4,200-square-foot leased space at 3104 S. Regal. It has said it wants newer space that includes more parking for patients.


Meanwhile, construction is expected to start next week on the new building at Quail Run, Sonneland says. The roughly $3 million project is expected to be completed in about six months, he says.


Sonneland says he still hopes to reach an agreement with Group Health, but adds that if the health-care provider chooses another location, he is optimistic about finding other tenants for the building. Matthew Byrd, of Spokane-based Cornerstone Property Advisors LLC, is marketing the structure.


Its a very nice building and a prime location, and I think well have no problem finding tenants there, Sonneland says.