Source: REOC San Antonio / Xceligent
The medical office market in the San Antonio metro area remained stable during the second quarter. Although gross leasing activity within medical-only office buildings generated only 1,874 square feet of positive net absorption, demand by doctors and medical-related tenants continues to spill over into other commercial properties. While this dispersion of activity lessened the concentration of leasing within medical-only facilities resulting in reduced absorption, the overall commercial real estate market has benefited from strong healthcare industry-related activity.
The medical-only office market closed the quarter with a citywide vacancy rate of 19.5% – unchanged from last quarter but softened compared to 17.5% recorded in the same quarter a year ago due, in part, to the addition of nearly 200,000 square feet of new inventory over the past eighteen months. Increased vacancy and flat absorption combine to limit rental rate growth. The cost of renting medical office space stepped up $0.24 compared to the same quarter last year to close the quarter at a citywide average rate of $24.05 per square foot per year on a full-service basis which marks a modest annual increase of only one percent.
There were no notable medical office deliveries in the second quarter but four projects totalling more than 160,000 square feet are expected to come online in the second half of the year. Pre-leasing success in buildings such as Inwood Medical Office (20,887 sf) and Rogers Road Medical Plaza (32,390sf) will bolster absorption figures in the third quarter.
Click to download REOC San Antonio’s complete 2Q 2015 Medical Office Market Report
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