Houston Healthcare Market Thrives in 2023: Lower Vacancy Rates, Rising Rental Prices, and Sustained Positive Absorption
Key Takeaways
- Vacancy fell since the end of last year
- Tenth straight quarter of positive absorption recorded
- Construction continues to slow
- Rental rates rose year-over-year
Houston Healthcare Market Highlights
Houston’s medical office building (MOB) market posted 667,006 square feet of positive net absorption in the first half of 2023. The vacancy rate fell to 11.6% from 11.9% at year-end 2022. The new MOB inventory completed during the first half of 2023 totaled 784,270 square feet, while there are 2.0 million square feet under construction. The average asking NNN rental rate rose 2.2% to $23.85 from $23.47 year-over-year. Transaction volume in 2023 is up 6.2% quarter-over-quarter, but the trailing 12-month transaction volume at $1 billion lags the second half of 2022 but represents a 58.1% increase in transaction volume year-over-year. The average price per square foot dropped to $401.80, a 13.4% decline year-over-year, according to Revista.
In the dynamic landscape of the Houston healthcare market, we’re witnessing a notable shift towards more strategic investments and development. The first half of 2023 has been pivotal, showcasing a resilient market with robust growth indicators. This period has seen healthcare providers and investors adapt to evolving demands, focusing on locations that offer both accessibility and state-of-the-art facilities. The rise in transaction volumes and the steady growth in rental rates reflect a market responding proactively to the healthcare needs of a diverse and growing population. This trend underscores the importance of strategic positioning and foresight in healthcare real estate, highlighting opportunities for investors and providers to capitalize on the burgeoning demand in this sector.
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