Tenants for medical office space harder to find

There was a period, not long ago, when those who owned medical office buildings were sitting on a pile of gold. In fact, a fair number of financially-troubled hospitals were able to ease their pain by selling their medical office properties and leasing them back--keeping the offices for their doctors, collecting rents and getting a big check, too.

Now, that era seems to be over. It's become a tenant's market, with medical office owners scrambling to lease their properties even at discounted prices. In the wake of a construction boom that preceded the U.S. economic collapse and tighter credit, vacancy rates have climbed and rents have gone down during the second half of this year, according to investment firm Marcus & Millichap.

According to the investment firm, the average per-square-foot costs for a medical office suite fell from $24.90 in Q3 '08 to $23.90 in Q3 '09. Given these stresses, some landlords are offering months of free rent, golf memberships and updates to their space, just a name a few amenities.

Sounds like this is a great time for doctors to move along. We doubt the market will stay this way for long, if current economic projections are correct. In the meantime, hospitals can't lose by holding onto their properties; their time will come again!

To learn more about the medical leasing market:
- read this American Medical News piece

Related Articles:
Medical office real estate remains in healthy financial state
Investors choosing medical real estate as safe haven
Physicians invest in medical real estate

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