Colliers International 2019 Q2 Greater Phoenix Medical Office Market Report

Download Report

Q2 Medical Office Market


  • Not only does Greater Phoenix continue to lead the country in job creation, it also remains #1 for population growth (three years running).
  • During the 12-month period ending in May, preliminary estimates show that employers added 66,500 net new jobs, an increase of 3.2 percent which places Greater Phoenix #1 in overall job growth for the country.
  • In general, the Greater Phoenix Medical Office Building (MOB) market performed well during the second quarter despite a few hiccups.
  • Net absorption turned negative, which at (152,827) square feet was the largest contraction since 1Q 2014’s (153,419) negative absorption amount.
  • Nonetheless, employers continue to add workers at a very active pace with healthcare employment rising 4.2 percent over-the-year, beating the overall employment market increase of 3.2 percent.
  • During the 1H 2019, 131,852 square feet was delivered to the market, which combined with negative absorption, saw vacancy edge 40 basis points (bps) higher to end the quarter at 14.1 percent. Despite vacancy’s near-term increase, as of the end of 2Q marks the 7th consecutive quarter with vacancy rates below 15 percent.
  • Asking rents witnessed a mild (0.2) percent contraction over-the-quarter but rose 4.2 percent over-the-year to end at $21.07 per square foot.
  • Investment sales volume increased over-the-quarter by 52 percent to $111.6 million across 18 transactions. The median sales price per square foot increased to $247, with cap rates resting at 7 percent.

OUTLOOK: The forecast for the local medical office market remains largely favorable. Although net absorption was negative for the quarter it is by no means a trend. The primary drivers of medical office demand remain firmly in place. Given robust population and job growth should continue to propel the MOB market in both the near-to-medium terms.

Markets remained robust for most of the second quarter and the drag on real estate prices many were expecting, as a result of rising rates, has not materialized. With a more dovish Fed, and more talk of QE 4 (Quantitative Easing), expect elevated demand for commercial real estate assets to continue, especially as yields continue to plummet (particularly across fixed income instruments a la Treasury notes) and as investor need for cash flowing vehicles, due in large part to changing demographics, continues to rise.

Medical Office Market Colliers International in Arizona

Colliers International 2019 Q2 Greater Phoenix Medical Office Market Report

Download Report
Related Experts
expert photo

Thomas Brophy

Research Director


As national director of multifamily research & analytics for the Cooke Multifamily Team with Colliers International, I am responsible for the aggregation, management and analysis of all market, and related, data sets.

I am committed to providing market-leading research services through the systematic deployment of custom, purpose-built software and analytic platforms for the creation of qualitative, not just quantitative, analysis.

In addition to publishing quarterly statistical reports for each market in which our clients operate, I maintain a database of both publicly available, and in-house built, leading economic/real estate indicators to provide forecasts and analyze and interpret real estate trends as they happen.

I also produce customized research reports on behalf of the team and clients, prepare market presentations and develop ad hoc research projects in support of business development.

My ethos: question different; for it is in asking better, more salient, questions that true market knowledge, and understanding is found. I am reminded of the words of T.S. Eliot who stated, “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”

In our new era of big data, we have reached peak data overload. Knowledge is a derivative of information; wisdom, knowledge’s ultimate abstract, can only be gained when tethered to, and guided by, past experience.

Data without context is like a light without a bulb, a market without a narrative or an explanation without a common reference point.

Data is but a guide to asking better questions; better questions lead to greater understanding, which, if deployed effectively and purposely, lead to better results.

Prior to my current role, I served as research director for Colliers International in Arizona, managing the research department entrusted with all market data and analysis activities. My creative outlook significantly enhanced research services for clients and brokers. Collaborating with other service lines and professionals, our research team provided extensive data compilation, including ownership, zoning, land use, property sales and demographics, and developed reliable statistical information.

My extensive experience includes collecting, analyzing and preparing market and economic data and research, as well as expertise in corporate communications, investor relations, strategic planning, brand management and public speaking.

Prior to Colliers, I was director of research for ABI Multifamily, where I developed market reports and research data used in marketing materials for ABI offices in Phoenix, Tucson, Sacramento and San Diego. I oversaw all data collection and reporting, wrote monthly market insight articles, and developed market podcasts.

As director of research and partner for Neighborhood Ventures (a multifamily investment firm), I collected, analyzed and wrote market data reports for use in investor presentations, offering materials and corporate communications. As principal with EPU Investments, I directed business and research operations for a multi-divisional investment company involved in single- and multifamily development and land services, including farming and water rights assessments and acquisitions.

Serving as an affordable housing specialist at Hendricks & Partners (now Berkadia), I provided assistance, research and guidance in creating the affordable housing division, and assisted brokers and clients in the acquisition and disposition of assets across the U.S.

View expert