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Vacancy ticks higher as tenant demand patterns shift

Colliers has release its 2014 Medical Office Report for the first quarter. Highlights include:

  • Economic and employment growth slowed in the first quarter and these demand drivers spilled over into the medical office market. Despite the recent slowdown, there are indications that growth should accelerate in the coming quarters, supporting future space demand.
  • Vacancy in the Greater Phoenix medical office market ticked up to 20.4 percent in the first quarter, compared to 19.5 percent at year-end 2013. Negative net absorption of 142,000 square feet was recorded in off-campus buildings, with the Scottsdale submarkets accounting for nearly 85,000 square feet of this total.
  • Vacancy in on-campus medical office buildings was 13.1 percent in the first quarter, slightly higher than the five-year average of 12.4 percent.
  • Sales activity in both traditional medical office buildings and medical office condos has slowed in recent quarters, due in part to a drop-off in distressed properties changing hands. With fewer REO properties selling, prices have ticked higher in both condo and non-condo sales.

Click here to download the full report [.PDF].

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