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Hospitals Target Outlying Areas for New Campuses

HOUSTON—Healthcare employment grew by 42% in a decade, fueling medical office building occupier demand, however, employment has outpaced medical office inventory, spurring new development.

By Lisa Brown | lisabrown | | Updated on August 26, 2016
MOB research Udstuen says interest by regional health systems and private investment will spur MOB development.
HOUSTON—In a city with a heavy focus on healthcare, medical research and biotech, the medical office sector is a vital indicator of the health of commercial real estate in the overall economy, but has gone largely untracked as a sector itself. With the assistance of local medical office building experts, CBRE research has tailored a report combined with a granular analysis that offers a detailed look into Houston medical office market trends. Healthcare employment grows by 42% in a decade, fueling medical office building occupier demand. Through most of the past decade, healthcare employment and medical office building inventory growth were converging. However, in the last 12 months, employment growth outpaced medical office building inventory, signifying a need for new development. In response to a broad geographic suburban expansion, major hospital systems are actively targeting Houston outlying areas for new hospital campuses, which will further fuel demand for on-campus and campus-adjacent Bayou City medical office building. Demand clusters emerge from new suburban medical campuses with class-A and on-campus medical office buildings the primary demand catalysts. This is due to hospital expansions continuing to trace mounting suburban demographics that tend to attract a dense physician base and clustered services. The development lifecycle is in full swing wherein during the next year, approximately 600,000 square feet of additional medical office building projects are expected to deliver, the majority of which are located in Energy Corridor, The Woodlands and Kingwood. Nelson S. Udstuen , vice president and regional director of CBRE Inc. Healthcare Services Group tells GlobeSt.com: “Over the next 24 months, CBRE anticipates sustained interest by both regional health systems and private investment for new medical office building development. Healthcare systems and physicians are focused on providing the highest quality of care to their patient base, so having access to new, state-of the art medical office environments is a critical component of this effort.”  

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