The medical office market has shown resiliency throughout the pandemic. Although there was initially a jump in vacancy, as the vacancy rate increased by 80 bps throughout 2020, negative effects seemed to have slowed, with the vacancy rate increasing 20 bps during H1 2021. Not only this, but there is a clear difference between the effects of the pandemic on higher quality product versus lower quality product. Class A product ended H1 2021 at a tight vacancy rate of 5.8%, while Class B and C more than doubled that, with a vacancy rate of 12.0%. Furthermore, Class A rents have skyrocketed despite the pandemic, having increased 12.2% since the beginning of 2020, rising from $22.66 to $25.43 average gross rent per square foot. Class B and C rents have also increased, albeit not as drastically, increasing 6.8% since the beginning of 2020, rising from $19.36 to $20.67 average gross rent per square foot. The positive performance of these fundamentals provides optimism for the medical office market going forward.
