Suburban Development Driving Medical Office Market Change
Vacancy and Absorption Trends
> Throughout the Minneapolis-St. Paul metro, the first half of 2018 had negative 22,011 square feet of absorption for medical office product.
> The Northwest, the largest Off-Campus medical office submarket, experienced negative 10,224 square feet of absorption for the first half of the year.
> On-Campus vacancy fell to negative numbers at mid-year of 2018, with negative 15,554 square feet metro-wide, bringing the multi-tenant vacancy rate of On-Campus product type to 9.49%.
> Off-Campus product absorbed positive 5,272 square feet in the first half of 2018, while the Off-Campus vacancy rate fell to 7.41%. Off-Campus buildings account for almost two-thirds of the total inventory of medical office product in the Twin Cities metro.
> At the mid-year of 2018, major construction projects total 82,697 square feet, with Twin Cities Orthopedic in Edina being the largest with 70,197 square feet of medical office space currently under construction. Approximately 400,000 additional square feet of medical office has been proposed, but has not broken ground to date.
> The most active construction markets in the first half of 2018 are the East and Southeast metro, specifically in the cities of Eagan and Woodbury. Eagan saw the delivery of 238,000 square feet and Woodbury completed four separate projects totaling 214,872 square feet.