Mid-year results for the medical office market in Columbia, South Carolina, show that even in times of economic downturn the medical market remains strong. The medical sector, which experienced an increase in employment of 1.57% from December 2008 to June 2009, has long been considered one of the fundamental building blocks of the local economy. Thus at mid-year 2009, the healthcare market in Columbia continued to offer some stability and insulation in an otherwise uncertain time.
The medical office market experienced positive activity during the first six months of 2009. Total market occupancy increased from 86.37% at year-end 2008 to 87.29% at mid-year 2009. Hospital-based medical office buildings (MOB) experienced a significant jump in occupancy during the first half of the year, increasing from 84.34% at year-end 2008 to 87.03% at mid-year 2009. An increase in demand resulted in a rise in average rental rates for MOB properties, from $22.29 per square foot at year-end 2008 to $22.67 per square foot at mid-year 2009. Rental rates for MOB space remained higher than non-hospital owned multitenant medical office properties due to significantly higher tenant improvement allowances offered by hospitals in order to attract quality healthcare practices.
Nationally, the medical office market has started showing signs of deceleration. Once considered by some to be a recession-resistant niche of the commercial real estate industry, lack of credit and capital may result in a downturn within this sector nationally. On a local level, we do not believe this to be the case. As Columbia serves as the healthcare hub for the region, the healthcare sector of the economy and medical office market should continue to expand through the remainder of 2009.
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