The Columbia, South Carolina, medical office market is one which is almost completely controlled by the four major hospitals operating within the Columbia area. The four hospitals include Baptist Medical Center, Columbia Providence Hospital, Lexington Medical Center and Richland Memorial Hospital. Columbia's medical office market currently consists of approximately 825,000 square feet, but this square footage is expected to increase by as much as 35% during the next two to three years. The occupancy rate of hospital based, medical office space as of April 30, 1997, was 80.2%, indicating a substantially soft market for medical office space. However, further analysis reveals that only certain segments of the medical office market are soft.
Medical office space is leased much differently than traditional office space. The medical office market is not controlled purely by the competitive nature of an owner desiring to lease space, but rather by the competition of medical institutions to attract physician practices to individual hospitals. This results in the leasing of medical office space directly to physicians on the campuses of some hospitals or certainly within close proximity to the hospital. Additionally, speculative medical office space is sometimes developed by a hospital so that an ample inventory of space is always available to support the efforts of hospitals to attract physician practices for alliances with the hospital. Therefore, the typical medical office building is viewed by hospitals as a recruiting tool for physician practices, and as such the degree of vacancy in the market is more acceptable than those standards typically expected by developers of traditional office space.
It is important to note that of the 825,000 square feet of hospital based medical office space, approximately one-third of the space has been constructed with the last three years.
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