Physicians and practices searching for new or expanded space in 2024 may be met with some new hurdles, according to an April 18 report from the San Diego Business Journal.
Currently, the demand for new medical office space is far outpacing the supply, according to the report. In addition, the price for medical office buildings is continuing to rise.
By the end of 2023, the average monthly rental rate offered by building owners for medical office space was 6% higher than it was at the end of 2022 at $4.22 per square foot, breaking the $4 mark for the first time in history.
Additionally, space is becoming scarce, especially for large systems seeking spacious facilities.
Forecasters predict that rental rates for medical space could top $5 per square foot by the second half of 2024.
Additionally, some markets are becoming more competitive than others when it comes to finding office space.
In San Diego, Calif., medical office vacancy rates sit at just 5.2%, below the national average of 7.75%.
Vacancy rates have been on a fairly steady decline since 2013, and there was just 9,990 square feet of ground-up medical office space under construction in the fourth quarter of last year.
On top of the scarcity of new construction, it can also be difficult to convert existing buildings to medical spaces due to space challenges and prohibitive zoning laws.