As baby boomers reach retirement age, the surge in the elderly population is increasing demand for medical office buildings (MOB) leasing all over the U.S. In the Southwest, specifically, the warm climate continues to attract retirees causing a spike in investment sales and the prominence of large medical campuses, which are fueling the medical office market.
Increasing Demand for Medical Office Buildings
According to GlobeSt.com, MOB’s are an inviting investment because they are efficient to run, affordable to operate, and are usually leased on a triple net basis. While general office tenants may no longer need the same office space footprint to house employees who can work from home, the widely accepted belief in the medical office market is that doctors will continue to need to see patients in an office setting.
As a result, there’s an increasing demand for well-equipped and newly constructed medical office space. The average asking rental price in 2019 for MOBs nationwide increased to nearly $24.17 per square foot.
Building Medical Offices For Population Growth
Medical office development is on the rise in markets where a growing population of patients needs services. Health systems are increasingly using lower-cost outpatient facilities closer to population centers. According to National Real Estate Investor Online, the total number of outpatient centers grew by more than 50% to approximately 41,000 from the years 2005 to 2016.
2020 Expectations for MOB Leasing and Rental Rates
A report from HBRE provides insights for the vacancy rates and demand in 2020. At the beginning of 2019, vacancy rates of medical office buildings held steady at 8.5% while the traditional rate was 13.3%. We can interpret this to mean that the medical sector is outperforming the office sector. Medical office real estate growth may have been mild over the last year, however, it is trending upward. Therefore, MOB’s become a very desirable portion of investor’s portfolios.
Despite recent short-term hits to MOB tenants, we believe the medical office sector is well-positioned for rapid recovery relative to other property types. Although some general office tenants have been forced to close their doors, unlike other sectors, medical office tenants and properties are positioned to bounce back rapidly sparking demand for new leases.
MOB Leasing with Plaza Companies
Our experts at Plaza Companies are your leaders in medical office space leasing; and we develop new projects every year. This shows our expertise about the Southwest communities in which we work to build healthcare services.
We are here to assist you in leasing your next medical office building in Arizona. Contact us today to find your next MOB!