Q2 2021 Medical Office Market
- Year-to-date net absorption is up to 173,311 square feet
- Banner Health delivering 128,000 square feet of the 150,500-square-foot new supply of the quarter
- Rental rate rose to $23.05, increasing 6 percent year-over-year
Net absorption for second quarter was 206,449 square feet in Greater Phoenix, recovering quickly from last quarter’s negative absorption and bringing 2021 year-to-date net absorption to 173,311 square feet.
Rental rates continue to rise as a healthy reflection of the medical office building market, increasing 6.1 percent year-over-year, ending at $23.05 per square foot.
Two new buildings were completed this quarter totaling 150,500 square feet, with a low vacancy of 8.7 percent. Another 231,000 square feet of development is underway.
Transaction volume during the second quarter increased with 15 transactions, totaling nearly $66 million that brought year-to-date volume to $150 million.
The rapid growth of Phoenix, coupled with the pro-business guidance from Governor Ducey, has helped Phoenix maintain a strong economy.
Phoenix will continue to see more growth in the medical sector as universities align with cutting-edge research to grow the overall ecosystem and fuel demand for space.
The price of land has increased throughout 2021, and will be reflected in future rental rates.