Medical Office Building Market Outlook: Insights from Transwestern’s Johnson to ULI
Eric Johnson
HOUSTON – The medical office building (MOB) market in Houston is robust and continuing to strengthen, according to Eric Johnson, national director of healthcare at Transwestern.
Current MOB vacancy sits at roughly 11 percent, Johnson said at the ULI Houston luncheon last week. That rate is expected to fall under 10 percent as newly constructed medical facilities are completed and leased. Approximately 400,000 square feet of MOB space is under construction, adding to Houston’s existing inventory of about 31 million square feet of medical and professional buildings.
Investment activity in the sector is active, Johnson added. In a recent transaction, Heitman announced the acquisition of 17 medical office buildings, including seven located in Texas, underscoring continued investor interest.
Johnson also noted a shortage of research and laboratory space in and around the Texas Medical Center, a critical gap given the center’s scale and research focus.
Bill McKeon, president and CEO of the Texas Medical Center, said future growth will feature more private-sector development to complete the center’s ecosystem by adding retail, multifamily housing and other amenities that support employees and visitors.
“The TMC3 is a great start,” McKeon said.
TMC3 is a planned, 30-acre mixed-use development at the heart of the Texas Medical Center, which employs more than 100,000 people. The project is envisioned to include office space, a hotel, retail, a convention facility and research space, creating a collaborative environment that complements existing medical and academic institutions.
