A booming population, aging demographics and freeway expansions have significantly increased demand for medical services in metro Phoenix, according to the Phoenix office of JLL, resulting in a 33 percent decrease in office vacancies since 2010. 

According to the company’s recently released Medical Office Overview, the metro Phoenix medical office market currently represents almost 17 million square feet of on- and off-campus space. An additional 301,000 square feet is now under construction – all located in the Southeast Valley, which at more than 4.52 million square feet represents the Valley’s largest medical office submarket.

“The variety and sophistication of Phoenix’s medical office space is maturing right alongside our population figures, and we are seeing positive results in all of our communities because of this,” said JLL Senior Associate Katie McIntyre. 

While the Southeast Valley is enjoying the lion’s share of active new construction, the Southwest Valley was the only metro submarket to achieve positive net medical office space absorption, totaling 26,723 square feet during the first quarter. JLL expects demand in that submarket to continue to rise, particularly following this year’s completion of the area’s new Loop 202 freeway expansion.

The Central Business District, Southeast Valley and Northeast Valley are at a near tie for lowest medical office vacancy rate, all sitting in the mid-11 percent range. This helps bring the overall Phoenix medical office vacancy to just 13.3 percent, a full 33 percent lower than it was five years ago. 

“These are powerful figures that are attracting everything from world-class hospitals and outpatient centers to innovative specialized treatment facilities. They are also encouraging both large-scale facilities and physicians groups to expand throughout the Valley, creating new development projects in growing communities,” said McIntyre. “That growth – along with our popularity as a retirement destination – will only expand this mix and provide welcome stability for our on- and off-campus medical projects.”

To access JLL research for Phoenix and across the U.S., visit the company’s research page at https://www.us.jll.com/en/trends-and-insights#research.