This Newsletter covers recent activity and conditions specifically impacting the national healthcare real estate market and those who are learning how to succeed in it. The Pinnacle Real Estate Group has compiled the following current market information from sources such as CoStar and Marcus and Millichap.
Healthcare Real Estate Transactions and New Construction
53-Acre Life Sciences District in Houston Scheduled to Break Ground. Hines and 2M Real Estate are scheduled to break ground and begin construction on a five-story, 270,000 square foot advanced laboratory and life sciences building in the Texas Medical Center of Houston. The first phase of Levit green, a life sciences mixed-use project, includes a 25,000 square foot incubator lab and office space for entrepreneurs and startups, as well as several lakes, a boardwalk, fitness center, outdoor garden, 7,000 square foot conference center, and 3,500 square feet of restaurant space.
Remedy Medical Properties Completes Development of Piedmont Healthcare Medical Office Building. Remedy Medical Properties has announced the completion of the 5-story, 113,000 square foot Piedmont Medical Plaza II which it manages and owns. The plaza is on the Piedmont Newman Hospital campus in southwest Atlanta. This is the second outpatient care facility on the Newman campus and provides a large range of services. The project broke ground in fall of 2019 and construction was completed in December of 2020, with a move-in phase at the end of January 2021. The building serves as a one-stop healthcare destination for patients in the Atlanta area.
167,348 SF Lease on Eleventh Avenue in Manhattan. The space for Icahn School of Medicine at Mount Sinai, which covers the fifth through eighth floors of the tower, is projected to take up to three years to build out. Once the space is completed, the school will utilize its new location for molecular therapies, research and treatment of breast and spinal cancers, outpatient care, and an imaging center.
Healthcare Real Estate Trends
Decline in Leasing Softens Fundamentals. Developers had more than 10 million-square feet of medical offices under construction in the nation’s major metros at the end of 2020 with completion dates stretching into 2023. More than half of the underway projects are due in 2021, providing the lowest delivery pace in more than 10 years. Reduced deliveries in 2020 still outpaced net absorption, raising vacancy to 9.4 percent, a year-over-year jump of 80 basis points and the highest rate since 2015. Leasing activity will likely recover relatively quickly once patients feel comfortable returning to medical providers for checkups and elective procedures.
Pinnacle Real Estate Group
The Pinnacle Real Estate Group is a combination of professionals who use their extensive experience in both valuation and transaction services within the healthcare real estate industry to guide clients through multiple types of arrangements in a time-efficient and cost-effective manner.
Christopher Louis, ASA, MAI