Amid Surging Medical Office Market in Metro Atlanta, Transwestern Leasing Brookhaven Medical Center II
Transwestern says Atlanta’s medical office market last year absorbed 639,378 square feet and is on track to match or exceed that level in 2018, with absorption of 390,458 square feet already reported in the first half of the year.
ATLANTA, GA—With absorption of medical office space in Atlanta at its highest level since 2008, Transwestern’s Atlanta office will be the exclusive leasing agent for Brookhaven Medical Center II, a 51,375-square-foot medical office development at 3929 Peachtree St. in Brookhaven, GA.
Led by senior vice president Steve Hall, Transwestern’s growing Healthcare Advisory Services team will market and lease the asset on behalf of a joint venture between G.H. Anderson & Co. and The Gipson Co.
In a recently released report on the medical office market, Transwestern says Atlanta’s medical office market last year absorbed 639,378 square feet and is on track to match or exceed that level in 2018, with absorption of 390,458 square feet already reported in the first half of the year.
In the second quarter of 2018, more than 170,000 square feet of new medical office space were completed, following the delivery of about 200,000 square feet in the first quarter, Transwestern says. As of mid-year, 369,092 square feet are under construction, with about 75% of that space already leased. The largest project is Northside Hospital’s office building in Midtown, but there are also projects under construction in the South Atlanta, Northeast, and North Fulton submarkets.
The demand for medical office space in the market has sparked Transwestern’s expansion of its Healthcare Advisory Services team. On the heels of vice president John V. Lopez joining the team, analyst Bo Stuart is the newest addition.
“Lack of space in Atlanta’s medical office market and its strong demographic profile has led to high absorption and a 15-year low in vacancy rates, with the overall market at 9.7 percent,” said Hall. “Brookhaven Medical Center II will provide much-needed space to the sector and convenient access to healthcare providers for Atlanta’s growing population. The property will be perfect for major health systems and large practice groups with a minimum square footage leasing requirement of 5,000 square feet.”
Brookhaven Medical Center II will neighbor Brookhaven Medical Center, a 48,588-square-foot medical office building leased by Walgreens and Piedmont Hospital, also constructed by G.H. Anderson & Co. and The Gipson Co. in 2016. The developers are expected to break ground on Brookhaven Medical Center II in fourth quarter 2018.
“Following muted development for nearly a decade, the volume of medical office product coming online is necessary, underscored by the solid rate at which the projects are being preleased,” says Bruce Ford, Transwestern’s Southeast president. “Our Healthcare Advisory Services team additions of John and Bo will enhance our service to clients and the market during this time of growth.”
For the past several years the Atlanta medical office market has seen steady levels of demand and limited development, which has brought vacancy down from over 15% to less than 10% today, Transwestern says in its report. Asking rental rates now are averaging $23.38 per square foot, and urban submarkets are seeing rents surpass $30 per square foot on a triple-net basis.
“Even with development on the rise, most of that space is already spoken for, so the forecast calls for continuing rent growth and a vacancy rate that will continue ticking downward over the next 24 months,” Transwestern says.