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

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Healthy activity charted in San Antonio medical market

2Q09_MedicalSnap_BlogSan Antonio offers more than 5.7 million square feet of multi-tenant, medical office space. Second quarter activity among medical buildings generated 18,371 square feet of positive net absorption led by the 20-year lease signed by Acuity Healthcare to fill recently completed Lexington Plaza (33,431 sf). Acuity plans to turn the speculative building into a long-term acute care facility (LTAC). In the South Texas Medical Center, Beucler Properties completed the Villa Rosa Medical Plaza (66,226 sf) building which came online anchored by Renal Associates 

The amount of new supply outweighed positive absorption resulting in a citywide vacancy rate of 18.6% compared to 17.9% last quarter and 16.0% recorded a year ago. At the same time, the citywide average quoted rental rate for medical office space rose to $21.76 per square foot annually on a full-service basis – an over-the-quarter gain of twenty-eight cents and over-the-year gain of $1.05 or 5.1% which reflects the impact of new product.

Although the pace of construction has slowed significantly over the past several months, the San Antonio medical market continues to expand. In the emerging Far West sector, the Christus Santa Rosa Westover Hills Hospital opened earlier this month and Oaks Development Group recently kicked off the construction of 1234 Westover Hills (95,000 sf). In the Far North Central sector, Healthcare Realty is moving towards the scheduled January 2010 completion of 18707 Hardy Oak (113,786 sf)  and in the South Texas Medical Center the University of Texas Health Science Center’s Medical Arts Research Center, known as The MARC (256,000 sf), is slated to reach completion by the end of August.

The strength of the local healthcare industry is spilling over into the traditional office market as well.  Topping second quarter news, Medtronic, Inc. leased the entire Overlook at the Rim (145,000 sf) – one of the newest speculative office buildings in the area’s traditional office inventory totaling 26.4 million square feet. The Overlook will serve as Medtronic’s Diabetes Therapy Management and Education Center supporting the growing Healthcare and Bioscience industry which generates an annual economic impact of approximately $16.3 billion and accounts for more than 116,000 jobs.  Additional activity included Concorde Career College, a healthcare vocational school, which leased 43,855 square feet at Corporate Square Garden.  Earlier this month, San Antonio-based Vidacare Corporation leased approximately 17,000 square feet at 4350 Lockhill Selma.

Read more in the San Antonio Business Journal’s article dated July 31, 2009 – Healthcare industry keeps heart of San Antonio’s real estate market beating

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