Houston’s Class A Medical Office Rental Rate Increases by 7.4% in First Half of 2012
Houston’s medical office market at midyear 2012 shows encouraging signs that it has recovered from the downward shift that began in late 2008. On a year-over-year basis, medical office vacancy decreased, and the citywide average rental rate and absorption increased.
Houston’s medical office market is expected to benefit from both short- and long-term regional trends. Disciplined development, with only 10 new buildings added to inventory in 18 months, will relieve the pressure in filling the existing vacant lease space. It is not surprising that much of the new development activity is occurring in outlying suburban areas, particularly in West Houston, Fort Bend County and The Woodlands, where strong population growth trends are projected over the next twenty-five years.
Houston Medical Office Market (All Classes)
Overall, Houston’s economy remains among the strongest in the U.S. The Houston metropolitan area added 85,000 jobs between June 2011 and June 2012, an increase of 3.3%, and is on track to add the same amount in 2013. Unemployment fell to 7.5% from 9.0% one year ago. Houston area home sales increased by 23.8% compared to sales one year ago. According to the Texas Workforce Commission, Houston’s education and health services sector added the largest number of jobs from June a year ago, up 20,600, with more than two-thirds of the increase occurring in ambulatory health care services. The 6.5% rate of growth in this industry was nearly three times the nationwide average of 2.2%.
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