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Tenant Demand is Accelerating and Vacancy is Dropping Throughout Phoenix
Phoenix, July 21, 2016 – Colliers International in Greater Phoenix released its mid-year 2016 Medical Office Market Report for Greater Phoenix. Report highlights are outlined below. For more details, refer to the attached report or click here view online.
– Vacancy of Medical Office space in Greater Phoenix dropped in the second quarter to 16%. That rate is 180 basis points below mid-year 2015. Vacancy in both on-campus and off-campus locations has declined during second quarter.
– Net absorption of medical office space reached 112,300 square feet at mid-year with only 86,400 square feet of new space under construction.
– Rental rates ticked higher during the second quarter, following a slight dip in the first three months. Increased demand and declining vacancy spurred the increases to an average asking rent of $22.80 per square foot. This is 2.5% higher than a year ago.
– Investment activity pivoted during second quarter with an acceleration of sales in traditional buildings and a slowdown in sales of medical condos. This is the exact opposite trend of first quarter 2016. Prices for the first half of this year are up from 2015 levels. The median price for medical office condos dropped 4% this quarter to $167 per square foot. Traditional medical office buildings sold for a median price of $136 per square foot in second quarter.
The medical office real estate market has had a volatile recovery from the recession, but is now showing steady, healthy trends. Tenant demand is forecast to reach its highest annual total in nearly a decade and new construction is limited. Vacancy will continue to tighten as net absorption significantly outpaces the addition of new supply. Investment activity will remain strong as rents gain traction and escalate. Improving property fundamentals are taking place when cap rates for medical office buildings are providing a yield premium and interest rates are at record lows.
About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.
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