Despite an ongoing materials and labor shortage, 9 million square feet of medical office space is expected to open in 2022, according to a report by real estate services firm Marcus & Millichap.
A backlog of appointments that are now resuming, plus the needs of the aging population, are contributing to strong demand for medical offices, the report said. The demand is projected to lead to a 2.5 percent increase in asking rent this year.
Vacancies are expected to drop to 9.2 percent, the report said. The metropolitan area with the lowest vacancy rate in 2021 was San Jose, Calif., with less than 4 percent. The highest asking rent in 2021 was in San Francisco, with about $60 per square foot.
The Southeast and Southwest markets appear to hold the best investment landscapes for medical office building investment, the report said.