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

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REOC San Antonio releases 2Q 2013 medical market update

Source: REOC San Antonio

Source: REOC San Antonio

The San Antonio medical office market has started showing encouraging signs that some medical providers have begun to refocus on their business models now that the future of the Affordable Care Act is somewhat more understood.  Emerus, for example, recently opened three 2-story medical office buildings each spanning more than 36,000 square feet and anchored by Baptist Emergency Hospital.  Victory Healthcare in partnership with Medistar Corp. delivered the Victory Medical Center (95,000 sf) at the end of July and Vanguard Health Systems is developing the 125-bed Resolute Health Hospital & Wellness Center in New Braunfels. 

The Resolute Health facility, which will feature a 3-story medical office building (42,000 sf), medically-integrated fitness facility, retail health and wellness shops and restaurants, is slated to open June 2014.  Population growth in Far West San Antonio continues to attract providers to the Westover Hills area where Trammell Crow Health Care Services is developing Westover Hills Medical Plaza III (70,000 sf) to be anchored by CHRISTUS Santa Rosa Family Health Center

Area medical office buildings experienced 59,867 square feet of positive net absorption in the second quarter led by activity in the Northeast sector with 20,467 square feet of net gain followed closely by the Northwest sector with 20,282 square feet.  Medical-related tenant activity continues to spill over into other segments of the market which dilutes the concentration of results within medical-only buildings but bolsters the market overall. General office space, for example, saw the recent leases by Carenet Healthcare Services, (13,012 sf) at Brooks City-Base (South) and Center for Health Care Services (12,445 sf) at The Packard Building (CBD).

The citywide vacancy rate improved to 16.8% compared to 17.0% last quarter and 19.0% recorded in the same quarter the previous year.  The steady improvement in occupancy continues to support modest rental rate increases.  The citywide average asking rental rate currently stands at $23.77 per square foot annually on a full-service basis which is up $0.40 compared to a year ago for an annual growth rate of 1.7%. Average quoted rates for top-tier medical office space stands at $27.24.

Click to download REOC San Antonio’s 2Q 2013 Medical Market Report.

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