“The Medical Office Market remains very active in Richmond. Limited Class A supply and new development due to inflated construction costs have pushed rents higher and driven occupiers and developers to look to renovate existing buildings to meet demand. Out of market investor continues to be strong for stabilized medical properties.”
Malcolm Randolph, SIOR | Senior Vice President
Net absorption remained positive with 40,344 square feet absorbed. The Virginia Physicians for Women was the largest contributor, adding 41,598 square feet of positive absorption at The Woodlands, a recently delivered medical office property owned by Hammes Partners.
The VCU Outpatient Facility was delivered in December. The 603,000 square foot pavilion serves as a one stop shop for outpatient care. VCU’s 500,000 square-foot Wonder Tower is still tracking for a mid-2023 delivery.
Asking rates ended a year long slide and rose to $20.92 per square foot.
Rising construction costs due to the ongoing supply chain crisis have encouraged elevated tenant improvement allowances while limiting new construction starts.