REOC San Antonio
Commercial Real Estate Since 1974   
Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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REOC San Antonio releases 2Q 2012 medical office update

Source: REOC San Antonio

Without question, the Supreme Court’s ruling to uphold the core elements of health care reform including the Affordable Care Act topped industry news in the second quarter. Providers are still in the process of studying the court ruling to measure its full impact.  In the midst of the uncertainty that continues to swirl around the issue, San Antonio-area medical office properties continue to move forward. 

New leases and expansions inked in the second quarter generated 50,854 square feet of positive net absorption within the medical office market which raised the year-to-date figure to 86,111 square feet of total net gain.  In response, the citywide medical market vacancy rate improved to 19.0% compared to 19.7% last quarter and 20.6% recorded last year at this time. 

The steady improvement in vacancy supported modest rental rate increases.  The citywide average quoted rental rate ticked up three cents over the quarter to reach $23.37 per square foot per year on a full-service basis which is up thirty-three cents compared to the same quarter last year for an annual increase of 1.4%.  The average price for top-tier, Class A medical space remained relatively flat at $26.98 – up less than 1.0% compared to a year ago. 

The market gained two new MOBs this quarter including Metropolitan Methodist Gateway (35,500 sf) located in the downtown submarket and 414 Sunset (24,500 sf) situated in the North Central sector.  Current construction projects include several multi-building, garden-office medical parks, major hospital expansions, and development of urgent care facilities – one of the fastest-growing segments of health care real estate.  The largest project underway is Victory Healthcare’s $49-million project at IH-10 & Loop 1604 featuring a 95,000 square-foot facility including 65,000 square feet of hospital space.

Investment activity in the second quarter included 400 Concord Plaza (49,270 sf) purchased by OI Rehab LP and Mission Trail Medical Plaza (76,484 sf) purchased by Healthcare Realty Trust.

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