A Healthcare Boom in Houston and Texas

by CoyDavidson on March 16, 2017

A Rapidly Expanding Population in Texas is Driving a Wave of Healthcare Real Estate Development

A healthy economy and rapidly expanding population is driving a wave of healthcare real estate development in the Lone Star State. Texas has the second-largest pipeline for healthcare real estate construction (hospitals and medical office buildings) in the nation at $15.8 billion, second only to California with $16.5 billion, according to medical real estate data firm Revista. Texas alone accounts for 14.5% of the total 109.4 billion square feet of healthcare construction projects nationwide.

Strong demand for medical office buildings (MOBs) has pushed the national vacancy rate to an all-time low of 7.4% at year-end 2016. MOB net absorption increased by 25% in 2016 from 18.1 million square feet to 22.7 million square feet—the highest annual total since 2008, according to a report from Colliers International.

Source: Revista, Colliers International


In Houston, there are more than 6 million square feet of new hospitals and expansions and medical office buildings currently under construction or in the late planning stages. These include major expansions in the Texas Medical Center and a wave of new development in the suburbs as healthcare providers seek to expand their reach into suburban areas with attractive demographic profiles.

Major Healthcare Construction projects in Houston include:

  • The Houston Methodist North Tower, a one million square foot tower valued at $697 million in the Texas Medical Center.
  • Memorial Hermann’s 1.34 million square foot expansion in the Texas Medical Center valued at $650 million.
  • The Houston Methodist Woodlands Hospital (470,000 SF) and Medical Office Building 2 (160,000 SF) valued at $326 million.
  • The Memorial Hermann Cypress Medical Center, 321,000 square feet valued at $117 million.

Given the healthy volume of healthcare real estate development in Houston over the past few years and some uncertainty regarding the Affordable Care Act and the new administration’s initiative of repeal and replace, we expect the volume of new development to taper off as providers complete the development projects currently underway.

Learn more about Colliers Healthcare Services

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