New London — Lawrence & Memorial Hospital will be relocating physicians currently clustered along Montauk Avenue and in the Shaw’s Cove complex to a 48,000-square-foot office building on Howard Street it purchased last week for $2.5 million.

The move of L&M physicians and some outpatient services to the vacant building at 194 Howard St. likely will not be completed until sometime early in 2014 after extensive renovations, hospital spokesman Michael O’Farrell said Thursday. L&M purchased the building, previously leased by Pfizer Inc., June 7 from downtown developer Peter Levine, doing business as Amber Howard Associates LLC of New Rochelle, N.Y.

“This is a very good sign for the economic development of the city,” Mayor Daryl Justin Finizio said in a phone interview.

Finizio said L&M’s move should help bolster efforts to promote development of the nearby Fort Trumbull area. The hospital is the region’s largest employer of New London residents, he added.

The sale of the Howard Street property for use as a medical office building brought the city $12,500 in conveyance taxes. Levine bought the building in June 1998 for $1.3 million, according to city records.

“I’m happy to have sold the building,” Levine said in a phone interview.

The building, which brings in about $105,000 in taxes to the city annually, had been on the market for sale or lease for nearly a year after Pfizer vacated the site as part of a global downsizing. It is not clear whether the property would be subject to taxation under the ownership of L&M, a nonprofit entity.

The purchase comes at a time of rapid expansion at L&M, which plans to open a new cancer treatment center in Waterford in partnership with the Dana-Farber Cancer Institute. L&M has also announced the formation of a Yale-New Haven Heart and Vascular Care Center and has added hours to its emergency pediatric services. L&M also just announced its intent to purchase of The Westerly Hospital for $69 million.

L&M currently leases a row of old houses on Montauk Avenue for use by its physicians — many of whom have occupied the buildings for decades — but would give up the properties as its doctors complete a move to renovated office space half a mile away, O’Farrell said. Surgeons at the Shaw’s Cove complex at the corner of Bank and Howard streets and physicians at L&M’s main campus would be moved to the renovated medical building as well, he said.

“The building would help us leverage operational efficiencies,” O’Farrell said. “It would also be a recruitment tool for new physicians.”

O’Farrell had no estimate on the cost of the renovations but allowed that it would be considerable.

The move is expected to “decompress” activities on the main hospital campus between Montauk and Ocean avenues, he said, clearing out about 16,000 square feet of space. Exactly which hospital functions will be moved to the Howard Street offices has not yet been determined, O’Farrell added.

The logistics of moving physicians to new quarters are being handled in-house, he said. The architect for the medical building, O’Farrell added, will be TRO Jung/Brannen of Boston.

l.howard@theday.com