3 Things to Know About Phoenix MOBs
1) The Sector's Heating Up
Colliers International's Fletcher Perry, a healthcare specialist, tells us he's seeing development across all sectors of healthcare in metro Phoenix, including new hospitals, MOBs, ambulatory surgery centers, skilled nursing facilities and community health centers. "We've been discussing build-to-suit options more than ever before with our clients, with doctors and practices and healthcare groups seeking to tailor their real estate to meet their needs," he says.
2) Demand's Now Outpacing Supply
According to Colliers International's latest report on the Phoenix MOB market, net absorption during the past 12 months totaled more than 283k SF, outpacing new construction in that time by 250k SF. While vacancy inched higher in Q1, the net absorption over the past year has driven the rate down 150 bps year-over-year to 18.2%. Sales activity was fairly steady in Q1 for both condo and traditional MOBs. (Pictured: Chandler Corporate Center, where Colliers International negotiated a lease by Arizona Priority Care late last year).
3) The Reason: Population, ACA and Old Space
Why the heat? The Affordable Care Act is providing more access to care; an aging population that's only getting bigger; and the fact that much of the space in the market is nearing functional obsolescence, if not already there, Fletcher says. "This has already translated into a faster pace of development."