REOC San Antonio
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Kim Gatley
enior Vice President & Director of Research at REOC San Antonio

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Health care industry driving demand for real estate in San Antonio

San Antonio’s real estate market will likely remain healthy in 2015 due, in part, to a demand for space from health care tenants. The city’s medical real estate market is benefiting from a growing population and larger number of seniors looking for health care services.

Industry leaders are predicting the demand for health care properties will increase and encourage more medical office development nationwide, the Wall Street Journal reported while covering the Health Care Real Estate Investment Opportunities Summit in New York last week.

One of two big takeaways from the summit was that the health care industry, guided by the Affordable Care Act, is providing more services to people throughout communities. This is leading more health care providers to offer services in non-traditional types of facilities, versus the standard hospital.

The second big trend industry leaders expect to see is more doctors moving to retail centers to set up their practices, versus the typical medical office building.

Kim Gatley, senior vice president and director of research at REOC San Antonio, said that real estate observers are witnessing that trend locally.

“The trend is to bring convenience to the customer and that means bringing practices to a retail location,” Gatley said.

One such project was 2600 Plaza on San Antonio’s South Side at 2600 SW Military Drive, formerly occupied by a furniture store. Once the furniture store left the space, the building’s new owner, Suren Kamath, decided to gut the building and turn it into a multi-tenant office building.

Early into the renovation work, a neurologist approached Kamath and said he had been looking for office space on a main thoroughfare on the South Side, but he couldn’t find any suitable space to lease. Kamath, seizing the opportunity, built a custom medical office for the neurologist in three months.

In fact, REOC’s 2014 third quarter report shows the South Side had the lowest vacancy rate for medical office buildings at 6.6 percent, compared to San Antonio’s overall vacancy rate of 18.4 percent.

Carl Bohn, vice president of REOC San Antonio, said that as more medical offices convert non-traditional properties for medical use, it impacts the leasing activity of medical-only office buildings. San Antonio’s new supply of Class A medical office also drove the vacancy rate slightly up across the city, according to REOC’s third quarter report.

The latest numbers for the fourth quarter will be released in the coming weeks, yet Gatley gave us a little preview opinion.

“Regardless of the political winds changing right now, I think the medical real estate industry will continue to grow,” Gatley said.

Click to read entire article: Health care industry driving demand for real estate in San Antonio (San Antonio Business Journal, 01-12-15)


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