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Nation’s Top MOB Markets Include Texas And The Midwest, And They Just Keep Growing

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Medical office buildings have proven to be a resilient asset class through the pandemic.

That’s because most tenants require these spaces to treat patients in person, providing a more stable tenant base for the asset class. And yet, these buildings are in short supply across the U.S.

Why? The buildings are more complicated to operate than a traditional office space—and more complicated to build—but investment in these facilities is growing, especially in Texas and the Midwest.

Using data provided by CRE research and listing platform CommercialEdge, 42Floors looked at the 25 biggest CRE markets across the U.S. and analyzed MOB construction activity between 2012 and 2021 to see how the asset class has gained interest for investment firms.

Overall, the top 25 medical office space markets in the U.S. grew 13% since 2012, adding more than 52.7 million square feet. Breaking it down, Los Angeles led the country for MOB square footage with more than 1,000 MOBs totaling more than 41 million square feet, which is far more than any other single market in the country, according to 42Floors.

That said, Houston ranked the second-largest MOB market in the U.S., which added 4.3 million square feet of medical office space over the decade, growing 15% to its current total of just over 33 million square feet. Dallas-Fort Worth, too, saw similar growth, based on the report, landing next on the list, adding 4.6 million square feet to its current 33-million-square-foot medical office footprint—16% growth since 2012.

Lower-tier markets with aging populations also saw some of the most growth during the decade, based on the report, like the Twin Cities. Minneapolis-St. Paul ranked No. 15 in the U.S. with 231 buildings totaling nearly 16 million square feet but has grown 24% in the last 10 years, adding three million square feet. That’s almost as much as was added in Los Angeles during the same period, which can be attributed to the city’s always-expanding 65-and-older demographic.

Finally, 42Floors found that Chicago’s market consisted of 28.8 million square feet across 427 buildings—the fourth largest MOB market. Chicago added more than 4.3 million square feet of medical office space and experienced 18% growth since 2012.

As for current developments in the Midwest, Chicago, Madison, Wis.; and Milwaukee will see three large projects delivered within the next two years:

• Chicago’s Joan & Paul Rubschlager Building at Rush (480,000 square feet) will be completed in Q3 of 2022;

• The Eastpark Medical Center in Madison (469,000 square feet) will be completed in Q1 of 2024;

• ThriveOn King in Milwaukee (455,000 square feet) will be completed in Q4 of 2023.

These three buildings will add more than 1.4 million square feet of medical office space to the region, based on the report.

 

Source: RE Journals

Denver Ranks As The Ninth Largest Medical Office Market In The U.S.

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Using information provided by CRE research and listing platform CommercialEdge, 42Floors looked at the 25 biggest industrial real estate markets and analyzed the last decade of medical office building construction activity — between 2012 and 2021 — to see how this asset class had blossomed into the spotlight for CRE investment firms.

Denver ranked as the 9th largest medical office market in the U.S.

Report Highlights:

• Denver ranks as the 9th largest medical office market in the U.S., with an inventory of 292 buildings, totaling 19.7 million square feet.

• 2.4 million square feet of medical office space were added to the market in Denver over the last 10 years, representing a 14% growth compared to 2012.

• In 2021, Denver logged the 3rd-largest completion of the year, with the 293,000-square-foot Denver Health – Outpatient Medical Center.

• Overall, the top 25 medical office space markets in the U.S. grew 13% since 2012, adding more than 52.7 million square feet.

Click here to read the full report.

 

Source: Mile High CRE

New Medical Office Building Pitched For West Orange County In Apopka

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A new medical office building has been proposed for west Orange County.

Longwood-based Dafflyn Property 2 LLC plans to construct a new 11,500-square-foot medical office building at 2106 Plymouth Sorrento Road in Apopka on 1.31 acres, according to city documents. A project that size could cost $1.13 million to build, according to industry standards.

The property, which totals 8.95 acres, already has an Apopka Storage location that was built in 2021 on the site. The medical office building is slated to be built adjacent a 0.68-acre lot that would be preserved for future development. The project will go before Apopka’s development review committee on March 2.

Dafflyn Property 2 LLC bought the vacant site in March 2018 for $1.4 million from a trust, according to the Orange County Property Appraiser. The 2021 appraised value for the property is $1.21 million.

Representatives with the developer were not available for comment. The Dafflyn entity is managed by Central Florida dentists Dr. Robert Bliss, Dr. Bobby Garfinkel and Dr. Dennis Horanic.

Meanwhile, the medical office building market has remained steady during the Covid-19 pandemic. There is more than 16 million square feet of properties that include some sort of medical office under construction, according to CommercialEdge, which is part of Santa Barbara, California real estate data company Yardi Systems Inc.

The changing demographics of the U.S. also will create more medical office demand. About 12.8% of Apopka’s population is comprised of people age 65 and older, compared to 12.3% for Orange County.

By 2030, the U.S. is projected to have more people age 65 and older than those age 18 and younger, according to the Census Bureau.

“As the aging population seeks health services closer to home, we expect to see increased demand for medical office buildings in non-campus settings,” said a CommercialEdge report.

That demand could draw conversions for some suburban office buildings outside of health campus settings, but they would have to fit specific development standards when compared to regular office space, like improved HVAC and different ceiling heights.

 

Source: OBJ