San Diego's medical office market is having a phenomenal year. This year, the market has posted three consecutive quarters of rising occupancy rates and total absorption of more than 107,000 square feet, according to a new report from JLL. In addition to physicians, which have long been drivers of medical office activity, single-specialty providers have been a new source of demand. As a result, medical office product now has a 6.2% vacancy rate and 2.3% rent growth in San Diego.

“The health systems and their respective physician networks have been the biggest driver, as usual, but a more recent trend we are seeing from a demand perspective is significant activity from new single-specialty healthcare providers entering the San Diego market,” Chris Ross, an EVP at JLL, tells GlobeSt.com. “Urgent care operators are the most active, in part due to patients demanding more convenient locations for primary services. Urgent cares can get up and running relatively easily and, with the right location, care, marketing and visibility, quickly become profitable.”

In addition to activity from these groups, Ross says that new entry of single-specialty healthcare groups from outside of the market has also fueled activity. “Other healthcare groups who are actively entering our market from out of town or out of state include concierge medicine, dermatology, fertility, dialysis, optometry, ophthalmology, physical rehab, behavioral health, med spas and even walk-in specialty centers such as orthopedics,” he says. “There is also a company or two testing the market with the opening of medical office time shares, which will be interesting to follow.”