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 4Q 2013 medical office market update

Activity in the San Antonio medical office market regained momentum in the final quarter of 2013 which resulted in positive net absorption, improved occupancy and a slight uptick in quoted rental rates.

Even as the healthcare segment of the economy adjusts to the changing conditions associated with the implementation of the Affordable Care Act, the local market continues see healthy demand for medical office space supported by population growth and expansion in healthcare employment.

The local medical office market experienced 39,409 square feet of positive net absorption in the fourth quarter which raised the year-end total to 245,206 square feet.  The citywide vacancy rate remained stable over the quarter at 16.8% and stands improved compared to 18.0% recorded in the same quarter the previous year.  Vacancy, while still somewhat elevated, is improving steadily and nearing a five–year low.

At the close of the fourth quarter, quoted full-service rental rates for all medical-only office property averaged $23.86 per square foot on an annual basis, showing a gain of $0.06 over the previous quarter and $0.30 compared to the same quarter a year ago for a modest annual increase of 1.3%.  Strong credit tenants may still be able to negotiate a few months free rent or additional improvement allowances but lease concessions are not as easy to come by as they were a year or so ago.

Disciplined development has helped prevent major upheavals in the medical office market.  San Antonio’s robust healthcare industry continues to drive activity and generate demand for medical office space.  The outlook for the local market remains positive.

Click to download REOC San Antonio’s 4Q 2013 Medical Office Market Report

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