L.A. Medical Office Rents Rise as Supply Tightens

Medical office rents in Los Angeles are among the highest in the nation. According to a recent report from CBRE, medical office rents this year were the third highest in the nation. In the second quarter medical office rents increased .9% to $33.84 per square foot year-over-year, and the trend continued through the end of the year. A supply shortage is behind the increase in rents. During the same time period, the vacancy rate decreased 177 basis points to 5.8% over the same period.

“There is a lack of space,” Angie Weber, first VP at CBRE, tells GlobeSt.com. “We have had very little new construction for medical office in the last 25 years. Because the providers are starting to do things very differently, like go off campus and go into the neighborhoods to be amongst the rooftops, you have all this new space being gobbled up. That is obviously raising the demand.”

In addition to looking to migration into neighborhoods, providers—of which there is a large market in Los Angeles—are beginning to expand. “We are very fortunate in Los Angeles. We have a lot of large providers and a lot of health systems, and we have a lot of independent health systems too,” explains Weber. “A lot of larger providers are going out and buying different practice groups to create their own network. That has created a need for larger blocks of space. That is also driving the market.”