2019 U.S. Medical Office Trends

U.S. medical office market fundamentals have been resilient in 2019. Demographic and health-care industry trends are firmly entrenched and forecast to persist, supporting long-term demand for medical office space.

• The U.S. medical office vacancy rate remained at 10.3% through midyear 2019—its lowest level of the expansion—and average asking rents stayed near record levels.
• Rent growth fell to 1.8% year-over-year in Q2, down from the five-year average of 2.6% as net absorption has softened since mid-2017.
• Top-tier domestic institutional and foreign capital, as well as REITs, have fueled demand for medical office properties. Although medical office investment volume is down from 2018, pricing remains strong.