Colliers’ Houston Medical Office 2014 Year-End Report Available

HOUSTON (Colliers International) – Houston’s medical office market recorded 284,394 sf of positive net absorption in the second half of 2014, bringing the year-end 2014 total to 705,775 sf.

In its year-end 2014 report, Colliers International reported that Class-A properties posted the largest amount of positive net absorption in the second half of the year with 194,670 sf, followed by Class-B properties with 84,000 sf of positive net absorption.

Occupancy decreased slightly during the second half of the year with the citywide average vacancy rate increasing 10 basis points to 11 percent from 10.9 percent in the second quarter.

Sublease space did not have a significant impact on current vacancy rates, remaining at 0.2 percent. Of the 3.2 million sf of vacant space on the market, only 52,500 sf is sublease space.

Disciplined medical office development activity has helped prevent major upheavals in current vacancy levels, Colliers said. Nine new buildings (353,315 sf) were added to the market during the second half of 2014. Currently, six medical office buildings totaling 371,797 sf are under construction.

Quoted full-service rental rates for all medical office property classes averaged $24.29 per sf in fourth quarter 2014, a 3.1 percent increase from $23.57 per sf in second quarter 2014.

The average Class-A rental rate increased by 1.2 percent from $27.82 per sf in second quarter 2014 to $28.15 per sf. Class-B increased 3.4 percent from $23.45 to $24.25, and the average Class-C increased 3.1 percent from $17.77 to $18.32.