Medical Office Building (MOB) Market Overview
The medical office market experienced a slight downturn during the second half of 2005, with 15,256 square feet of negative absorption. Even with this small decline, the market still remains strong with an occupancy rate of 90.20%. Average quoted rental rates, though slightly down from mid-year at $20.67 per square foot, are still above quoted levels twelve months ago ($20.20 per square foot).
The majority of space in this 1.50 million square foot market is located in and around the campuses of Columbia’s four major hospitals, Lexington Medical Center, Palmetto Health Baptist, Palmetto Health Richland and Providence Hospital, as well as in emerging clusters in the growing suburbs of Irmo and Northeast Columbia.
Historically low interest rates have given rise to many physicians practices purchasing or building their own medical office space and moving away from hospital-owned MOB’s. With rising interest rates and rapidly escalating construction costs, this trend will slow over 2006 and expanding medical practices will occupy greater amounts of rental space in multi-tenant medical office buildings.
Asking rents may decline slightly in less occupied buildings as landlords push to lease space, but as higher energy costs boost landlord expenses, we expect a pattern of increased rents across the market in the next twelve months. If the medical sector continues to expand, as it has over the first half of the decade, we would also expect the market to tighten and occupancy rates to rise closer to 93% in 2006.
Download the full report
For more information, including the market summary statistics, download the full research report.Download report