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 2012 medical market update

Source: REOC San Antonio

New leases and expansions inked in the first three months of the year generated 35,257 square feet of positive net absorption in the medical office market.  Demand for medical space is actually much stronger than indicated but, in many cases, healthcare-related tenants have targeted non-medical buildings.  The citywide medical market vacancy rate improved slightly to 19.7% compared to 20.0% last quarter.  The current vacancy rate, however, is up slightly compared to 19.3% recorded in the same quarter last year due mainly to the addition of new space over the past twelve months including Mission Trail Medical Plaza (80,000 sf) and Shavano Oaks III (26,532 sf).    

Quoted rental rates continue their steady climb stepping up twenty-five cents from last quarter to reach $23.34 per square foot per year on a full-service basis.  The citywide average quoted rent is up fifty-nine cents compared to the same quarter last year for a moderate annual increase of 2.6%.  The average price for top-tier, Class A medical space registered $27.22 – up 3.4% compared to a year ago. 

Metropolitan Methodist Gateway

Development of medical real estate is on the rise with two MOBs set to come online next quarter including Metropolitan Methodist Gateway (35,500 sf) and 414 Sunset (24,500 sf). The largest project under construction is Victory Healthcare’s $49-million project to feature a 95,000 square-foot facility including 65,000 square feet of hospital space. 

Furthering the fitness ofSan Antonio’s medical market are recent announcements for future growth by major hospital systems.  Methodist Healthcare is planning a $44 million expansion at its Metropolitan Methodist Hospital and a second significant expansion of its Methodist Stone Oak Hospital facility; meanwhile, CHRISTUS Santa Rosa announced plans to reposition its downtown campus into a children’s hospital and research center which could meet a long-identified need and move the city towards the goal of being a global leader in healthcare and biosciences.

Click to read related article: San Antonio’s medical-office market’s vital signs continue to improve (San Antonio Business Journal, 5-25-12).

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