2 December 2019

U.S. medical office market fundamentals have been resilient in 2019. Demographic and health-care industry trends are firmly entrenched and forecast to persist, supporting long-term demand for medical office space.

  • The U.S. medical office vacancy rate remained at 10.3% through midyear 2019—its lowest level of the expansion—and average asking rents stayed near record levels.
  • Rent growth fell to 1.8% year-over-year in Q2, down from the five-year average of 2.6% as net absorption has softened since mid-2017.
  • Top-tier domestic institutional and foreign capital, as well as REITs, have fueled demand for medical office properties. Although medical office investment volume is down from 2018, pricing remains strong.

Figure 1: Medical Office Supply & Demand

Fig-1-Medical-Office-Supply-Demand-3

Source: CBRE Research, Q2 2019.

Figure 2: Medical Office Asking Rents

Fig-2-Medical-Office-Asking-Rents-3

Source: CBRE Research, Q2 2019.

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