Market Report: The Houston Medical Office Market proves to be recession proof so far in 2009

by CoyDavidson on September 11, 2009

Colliers International has just released its midyear Houston Medical Office Market Reportand despite current economic conditions, medical office space has proven to be a strong performer over the past 12 months.

While leasing activity has been anemic in the Houston Office Market in 2009, the Medical Office Market has been the one bright spot and this is a trend that is fairly consistent in other markets throughout the U.S. We are polarized in our country over the Obama administration’s healthcare reform policy, yet healthcare remains to currently be one of the few growth segments in the U.S. economy which makes it such a big issue.

Healthcare spending in the U.S. reached $2.3 trillion in 2007, and is projected to reach $3 trillion in 2011 and $4.2 trillion by 2016, reports the National Coalition on Health Care.

There are two major types of medical office buildings: properties near hospitals, and off-campus buildings that may be miles away. Growth in the off-campus sector is fueled by consumer demand for more medical services to be located closer to residential neighborhoods.

Houston Medical Office Market Highlights 2009

  • Average asking rental for rates for Class A medical office increased to $29.24 on a full service basis from $27.22 a year ago, with vacancy dropping from 19.9% to 13.7%
  • Overall the for all classes of medical office space the market absorbed 275,070 square feet in the first half of 2009 decreasing the overall vacancy rate from 14.7% to 13.8%
  • Overall the asking average asking rental rate for all classes has remained flat at $22.74 as compared to $22.73 a year ago which suggests the gap between Class A and B / C properties is only widening.

Download the Report

Coy Davidson is a member of the Colliers National Healthcare Services Group and has extensive experience in healthcare related real estate assisting major hospital systems, private physicians and medical office building owners with leasing and the acquisition and disposition of medical properties.

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