As Charleston continues to enjoy a robust economy, it’s strength has maintained both stable commercial and residential real estate markets. Greater Charleston’s medical office market has shown continued growth throughout 2006 as total medical office inventory has increased from approximately 1,855,000 square feet at Year End 2005 to approximately 1,932,000 square feet by Year End 2006.
Medical expansion has been and continues to be witnessed in each of the four submarkets as we see new construction of freestanding medical office buildings (MOBs) for private physician groups either expanding into new submarkets or continuing the trend of choosing ownership over leasing. Hospitals which are seeing growth, such as Bon Secours St. Francis in West Ashley, Roper Hospital, and MUSC’s Hospital Replacement Project, indicate growth on a larger scale and exhibit overall stability for Greater Charleston’s medical office market.
As inventory continues to increase, so does rental rates in all classes. With the continued growth in land costs and construction costs, these two elements are driving up rental rates in the medical office market as in all other real estate sectors. Overall quoted rental rates average $24.19 per square foot, an increase from one year ago with an average rental rate of $22.72 per square foot. New product fully serviced to include all operating expenses, are now in the range of $30-$32 per square foot which is an increase of 20-25% of overall costs from four years ago.
Other than the recent delivery of Roper Hospital’s expansion of approximately 245,000 square feet on Calhoun Street and MUSC’s Hospital Replacement Project consisting of approximately 518,000 square feet, no projects other than Dr. Calcote’s new Class “A” MOB located at 163 Rutledge Avenue have been constructed and currently there are no other true MOB projects proposed on the Peninsula.
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