GlobeSt.com: Where are the most doctors located in San Diego?

Ross: With four hospitals, three of them within a half-mile radius, the UTC submarket has by far the highest concentration of physicians. It comprises more than 15% of the county's doctors, and only East County comes close because it has approximately four times the geographic footprint of the greater UTC submarket.

GlobeSt.com: Why are the submarkets with the lowest vacancy rates so low?

Ross: At 4.1% vacancy, Kearny Mesa has the lowest vacancy rate in the county, primarily a result of the steady growth Sharp HealthCare and Rady Children's Hospital are seeing. Meanwhile, literally no new multi-tenant inventory has been built in the last 10 years. The only medical building developed during that period was a 170,000-square-foot building on Copley Dr. East County and South County have the second- and third-lowest vacancy rates at 5.0% and 5.7%, respectively. They have both experienced a significant increase in insured population—particularly from 2014 to 2016, following the implementation of the Affordable Care Act—and again, almost no new product is coming online. The inventory of medical buildings in South and East County has only increased about 10% over the past 10 years in each of these submarkets, but the number of insured residents and the overall demand for healthcare has increased by a much greater margin.

GlobeSt.com: Where is there a need for more medical-office space, and what type?

Ross: We need more medical space, specifically outpatient and clinical facilities, everywhere except the the SR-78 Corridor from Oceanside out to Escondido. Vacancy is declining and rents are rising everywhere. San Diego is the second most-expensive market in the country for healthcare providers, yet there is disparity between physician reimbursement rates in our community as compared to other similar counties with high cost of living and doing business. The development of more medical property is a win-win for everyone: residents gain more convenient access to care and better facilities, developers have the ability to add high-quality assets to their portfolios and some of the upward pressure on physicians' occupancy costs is better kept in line with where it should be.

GlobeSt.com: In the areas with the highest vacancy rates, why is this space vacant?

Ross: The entire 78 Corridor has had a disproportionately high amount of new medical office development, mainly due to its availability of developable land that does not exist in most other areas of the county. This has led to a large increase in inventory, and occupancy levels have not been able to keep pace given the lower demand for space in this area compared to coastal submarkets. It has taken several years for things to stabilize, but the area has steadily rebounded, and vacancy is now hovering around 10%.