Houston Medical Office Market Snapshot Q3 3023

The overall trends show a steady Houston medical office market with tightening vacancy, rental growth, high construction activity, and healthy hospital system expansion.

Total Square Feet: 43,423,865

Square Feet In Progress: 2,156,643

Sold Volume TTM: $233,685,837

Occupancy TTM: 88.3%

Average Rent (NNN): $23.82

Rent Growth (Y/Y): 1.9%

• The occupancy rate was 88.3% in Q3 2023, up 124 bps from the prior year. This indicates a tightening medical office market.
• The average asking rent was $23.82 per square foot NNN in Q3 2023, up 1.9% from the prior year. This indicates steady rental rate growth.
• 18 medical office sales transactions occurred in the past 12 months totaling $233.7 million, down 67.9% in volume from the prior year period. Sales volume has declined significantly.
• 2.2 million square feet of medical office space was under construction at the end of Q3. This represents 5% of the total metro medical office inventory, indicating continued development and expansion.
• Major health systems like Houston Methodist, MD Anderson and Memorial Hermann continue to expand their footprint in the metro area.
• Top hospitals in the metro are seeing strong inpatient and outpatient revenue growth and have EBITDAR margins in the 13-20% range, indicating healthy operating performance.

Source: Revista