HOUSTON – Houston’s medical office market demonstrated strength in 2014, according to a medical office report by Colliers International.
The citywide average vacancy rate was 11 percent at year-end 2014, down from 12 percent at the end of 2013, Colliers said. “Disciplined medical office development activity has helped prevent major upheavals in current vacancy levels,” the report said.
Sublease space has not had a significant impact on Houston’s current vacancy rates. Of the 3.2M SF of vacant medical space on the market, only 52,500 SF is sublease space.
Nine new buildings (353,315 SF) were added to the market during the second half of 2014. Currently, there are six medical office buildings totaling 371,797 SF under construction.
Colliers reports the largest medical office building currently under construction is the 150,000-SF Class A Springwoods Village Medical Office Building located in The Woodlands. The 6-story building is 33.3% pre-leased and is expected to deliver in September 2015.
In terms of sales activity, Colliers reported 13 Houston-area medical properties sold since July 1, 2014. The majority of the sales that occurred were patient medical centers and the average sales price was $340 per SF and the average cap rate was 5.95 percent.
Currently, there are 64 properties listed for sale and 3 pending transactions.
The Texas Medical Center, south of downtown near Rice University, has more than 290 professional buildings. The 1,345-acre Texas Medical Center, is the world’s largest medical complex with 41 member institutions, including leading medical, academic and research institutions, with a total of 106,000 employees.