Conditions improved in the San Antonio medical office market in the first quarter evidenced by a slight decrease in the citywide vacancy rate within the city’s inventory of more than 7.2 million square feet of medical-only office lease space.

Even as the healthcare business model continues to undergo significant change, fundamental factors, such as population growth and an aging population, continue to drive demand for medical office space.  The citywide vacancy dipped to 20.0% compared to 20.5% last quarter. 

The average quoted rental rate for medical-only office saw a decrease of $.04 from last quarter to reach $24.92 per square foot on an annual full-service basis. (To adjust for buildings which quote rents on a triple net basis, operating expense figures have been added into the equation to arrive at an average equivalent full-service rate.)

With limited speculative construction underway, the market is not expected to see any significant spike in vacancy through the course of the year.  However, competition among the growing number of free-standing urgent care and emergency room facilities may present a challenge for some.

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