Anne Spencer
Director Anne Spencer Published the Report with Cushman & Wakefield’s Healthcare Practice Group
Cushman & Wakefield announced today that it has released the 2017 Central Florida Medical Office Report, a comprehensive analysis of on- and off-campus medical office inventory in numerous hospital clusters located throughout Orange, Seminole, Osceola and Lake counties.
The fourth-annual report is published by Director Anne Spencer in conjunction with Cushman & Wakefield’s Healthcare Practice Group. It is the only report of its kind in the Central Florida region.
Key take-aways from the most recent report include:
- Overall vacancy of medical office space in Central Florida has steadily decreased since 2011, falling another 2.8 percentage points over the past year to 6.0 percent. Spencer believes the trend will continue, and vacancies will fall further over the next year.
- Direct triple net asking rents for medical office space jumped 11.7 percent year-over-year to $19.12 per square foot per month. Spencer expects rent growth to continue through the first quarter of 2018.
- Net absorption of medical office space jumped to 100,190 square feet in the first quarter of 2017, a significant increase over the same period in 2016. Spencer anticipates absorption will hold steady over the next 12 months.
- The trend of hospitals acquiring physician groups appears to be slowing. Physicians who choose to remain independent are partnering with other like-minded groups or working under larger management umbrellas.
- Acquisition and interest by Real Estate Investment Trusts (REITs) in Central Florida medical office buildings (MOB) picked up over the past year, but was still low compared to nationwide statistics. Private investor activity has been more prevalent, likely due to their ability to acquire smaller MOBs valued at less than $3 million. REITs focused on larger, institutional assets over $5 million.
- Cap rates continue to fall in the MOB sector, especially for hospital-credit tenants. Even with small, off-campus assets under 20,000 square feet, cap rates have dropped below 7 percent.
“Central Florida’s fast growing population is fueling hospital expansions,” said Spencer. “This growth trend will continue in 2017 with the big three healthcare systems — Orlando Health, Florida Hospital and HCA — competing for market share.”
“The growth of the medical office market in Central Florida stems, in part, from the evolving way healthcare is delivered to patients,” said Spencer. “The focus is now on providing convenient access, improving quality of life and establishing communities. These changes are reflected in the new ways they are executing their real estate strategies, including the development of medical office buildings with these tenets in mind.”
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients’ ideas and putting them into action. To learn more, visit www.cushwakecentennial.
