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 1Q 2011 medical office report

Source: REOC San Antonio

While new construction of most commercial projects has sharply declined over the past two years, San Antonio continues to see a flurry of medical-related activity dominated by hospital expansions and renovations.  In addition to the massive public projects, one speculative medical office building opened its doors in the first quarter – Westover Hills Medical Plaza II (70,000 sf) which expanded the citywide inventory of tracked multi-tenant medical office space to more than 5.95 million square feet. 

Medical Plaza II, which sits adjacent to the CHRISTUS Santa Rosa Hospital – Westover Hills and Medical Plaza I (60,000 sf), came online in the Far West sector with some pre-leasing in place including US Renal Care (10,000 sf) and reported several other leases currently under negotiation. 

In all, new leases and expansions within the medical office market generated a total of 8,143 square feet of positive net absorption in the first quarter.  Medical office properties did not stage a stellar performance in the first quarter but it was positive nonetheless and indicative of the slow and steady gains that the San Antonio market is known.  The addition of new supply outpaced the net gain which caused the citywide vacancy rate to increase from 18.2% last quarter to 19.0% at the close of March.  Despite the addition of new supply, the citywide vacancy rate stands improved compared to 19.3% recorded last year at this time.  

The average quoted full-service rental rate for medical office space rose sixteen cents over last quarter to reach $22.75 per square foot – primarily the result of new, higher-priced space being added into the mix.  Over the year, the citywide average quoted rent is up fifty-eight cents for a moderate annual growth rate of 2.6%.

Read more at San Antonio’s medical-office vital signs still trending well, report shows (San Antonio Business Journal, 5-6-11) and Demand for medical facilities in San Antonio expected to grow significantly (San Antonio Business Journal, 4-29-11).

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