Healthcare: Medical vacancy up, yet so are rents

by Carrie Ghose for Business First

The long-awaited opening of OhioHealth Corp.’s outpatient building in southern Delaware County has done some curious things to Central Ohio’s recovering medical office market.

The Columbus office of Colliers International this week released its third quarter market research report on medical office space, showing a slight uptick in vacancy to 13.4 percent from 13.3 percent the previous quarter.

“This change is in line with what the market has experienced over the last two years: moderate to small negative change in total vacancy quarter over quarter,” says the report by medical specialist Paul Heiserman.

Vacancies would have stayed steady if not for the opening of OhioHealth’s 20,000-square-foot Delaware Health Center, seen as the first building for a planned campus to someday replace Grady Memorial Hospital. Otherwise, expanding practices such as Mount Carmel Health System’s Taylor Station Surgery Center and Ohio Gastroentrology Group Inc. were absorbing space.

“Conventional supply and demand wisdom would indicate that the edging up of vacancy would create

lower rental rates, but it has not,” Colliers reports. Again, the anomaly is OhioHealth, because asking rates of $16.25 per square foot in Delaware are driving up average rents.

Take away the anomaly, though, and it could be a friendly environment for tenant negotiations, Heiserman writes.

Overall activity is down in the sector because uncertainty about federal health reform has physician practices “in wait-and-see mode,” the report says. They may decide to go ahead and move if they perceive gridlock to come from Washington.

Speculative office space is not being built, the report says. Ongoing construction is for already-claimed spaces, such as OrthoNeuro anchoring an Equity Inc. building next to Mount Carmel New Albany Surgical Hospital or the 100,000-square-foot JamesCare for Ohio State University Medical Center, set to open in January at Gowdy Field.

[bizjournals.com]

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