"There is so little new construction going on of medical office buildings that we've had a rent spike of 30% to 40% in the past five years," Dettling says. At the same time, Dettling tells GlobeSt.com, rising prices for medical office buildings have driven cap rates to new lows in the range of 5.5% to 6%, compared with traditional cap rates in the range of 8% to 9%.

Rising rents and falling cap rates are just some of the results of changes in the medical industry that are affecting the amount of medical space that gets built, who buys and owns it and where it is developed, Dettling says. At the heart of the changes is demand for medical space through most of Greater Los Angeles that has driven vacancy to 5% or below in most markets, with little or no sublease space.

Those figures compare with an overall vacancy in the 10% range for general office space. Vacancy for medical office space is even tighter in the West Los Angeles markets, about 2%, Dettling says.

One reason that construction of medical office space has waned is that it traditionally has been built near hospitals, and in built-out areas like Los Angeles no more land is available for new space near the hospitals. Changing conditions in the health care industry are altering that scenario, however.

As Dettling explains, advances in medical technology are enabling doctors to perform more procedures on an outpatient basis in their own freestanding medical buildings that do not necessarily need to be located near hospitals. This also has the advantage that doctors can own the medical buildings and be free from some of the restrictions that they traditionally faced when renting space in buildings owned by hospitals.

"There are certain specialties that really need to be near the hospital campus, but others can get a little bit farther from the hospitals and save on their leases," Dettling explains. "They very often now are more able to do some of the things that they were not able to do in buildings that were owned by hospitals and had certain covenants and restrictions."

Another change affecting medical office space in California is the state's requirement for seismic retrofit of hospitals. Dettling estimates that hospitals in the state will need to spend more than $100 billion by 2015 to meet the seismic requirements.

Those that are owned by multihospital systems with greater access to capital will be able to pay for the changes, but others who are freestanding may or may not be able to pay these costs, especially with insurers reducing reimbursements to hospitals. "Any hospitals under 100 beds, unless they're the only hospital in town, may be at risk," Dettling says, unless the hospital can find a well-capitalized buyer.

Doctor groups may represent just such well-capitalized buyers, he points out, noting that doctor groups in Los Angeles have already acquired several hospitals. Such acquisitions serve the dual purpose of keeping the hospital operating as a health care facility and also providing much-needed medical office space for the doctors.

Another source of new medical space could be on the horizon as well. "Building owners are starting to recognize that physicians will pay the higher rents, and developers are getting to the point where they believe it will be possible to add new facilities by passing on high construction costs to the end user," Dettling says. "But new buildings are at least two to three years away."