The Columbia, South Carolina, region as a whole remained fairly insulated from outside economic forces during 2008 due to a diversification of the area’s economy across many sectors. The medical market has historically been one of the key building blocks of the economy that has added to the region’s stability. This has held true through 2008 as the medical sector of the economy continued to expand over the course of the year. The healthcare sector made significant gains in job growth, expanding 6.3% from November 2007 to November 2008. The Columbia economy as a whole experienced negative job creation of 1.2% during this period, demonstrating the stability that healthcare provides to the local market.
Multi-tenant medical office properties, including hospital-owned medical office buildings (MOB), remained stable during 2008 with no dramatic change in occupancy rates. Rental rates also held constant, although there was a large variance of rental rates between independently owned multi-tenant properties, which averaged $14.93 per square foot at year-end 2008 and MOB properties, which averaged $22.29 per square foot at year-end 2008. This difference can be attributed to the large tenant improvement allowances provided by hospital systems to attract quality practices to the MOBs.
The next twelve months should prove interesting as the healthcare sector continues to expand in Columbia. Under normal market conditions, private practices would explore owning space, especially as construction costs decline from levels experienced in 2007 and early 2008. In 2009, however, limited credit markets will create a higher demand for MOB space which should result in a increase in occupancy rates of MOBs over the next twelve months.
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