Q4 2020 Medical Office Market
The Greater Phoenix medical office market added 26,451 square feet of inventory in the fourth quarter, including a 16,000-square-foot building fully leased to BioLife Plasma Services in the Glendale submarket. This submarket led the market with the most product delivered in 2020. In addition, a 10,451-square-foot building in the West I-10 submarket was completed and fully leased to Estrella Women’s Health Center.
- Q4 net absorption reached 111,974 SF, marking the fourth consecutive quarter of positive net absorption
- 2020 ended with a total 485,566 SF of positive absorption
- Vacancy dropped to 13.2%, 50 bps lower YOY and 20 bps lower over-the-quarter
- Available sublease space decreased 16% over-the-quarter and increased 32.2% compared to Q4 2019
- Projects under construction are pre-leased at an astonishing rate of 76.7%
- Continued sprawl of the city will create more demand for new construction in the West Valley and Southeast Valley
- Rental rates stayed strong, increasing 1.2% since Q3 and elevating by 5.3% YOY to end 2020 at $22.28 PSF
- Investment sales volume captured momentum, increasing 45.2% over-the-quarter, but decreasing 8.5% over-the-year to $66.5 million
- Median price per square foot increased 18.4% over-the-quarter to current $174 PSF, which is 21.1% below the 2019 year-end price
Vaccine progress will stand out as a dominant market narrative throughout 2021. As confidence grows, we will experience a transition year, moving back to services from goods, and to in-person from virtual. The scars of 2020 will remain vivid from businesses that did not survive, but the market is in a great position to continue pushing forward.
In the midst of the COVID-19 outbreak, information and data is emerging at a quick and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.