Phoenix Medical Office Jobs Increase 3.7%
The job growth is driving medical office activity and new development throughout the greater Phoenix market.
“The sustained population growth the Phoenix Metro has witnessed over the last decade is fueling the need for more medical services,” Tom Brophy of Colliers International, tells GlobeSt.com. “In a similar way that retail follows rooftops so to do population increases lead to greater need for medical services. Maricopa County has led the nation in year-over-year population growth taking the top spot each year since 2016.”
The population has fueled overall job growth, and the medical office market is another beneficiary. “Not only has Phoenix been top spot for population growth, Phoenix has also been in the top five for overall job growth; since 2010, medical and related jobs in the Phoenix Metro have increased a little over 40% to approximately 281,000 total jobs. In fact, the health care related job growth rate for Phoenix is nearly double that of the US, which, in turn, is fueling medical office demand,” adds Brophy.
The recent medical office market activity is healthy, with 100,000 square feet of absorption in the third quarter and the delivery of more than 200,000 square feet in medical office development. However, Brophy says the numbers miss a bigger trend in medical office. “While everyone wants to talk about over-the-quarter or over-the-year numbers, and while certainly important to look at, I tend to think that it misses the overall trends, both demographic and economic, that the MOB asset class finds itself,” he says. “Obviously, everyone is aware of our aging population, which is only going to accelerate as we move into the 2020s. As the Boomer population ages they will change from a net accumulator of wealth to a net spender, particularly for medical services.”
These demographics changes are also fueling more medical office activity, along with job and population growth—but the industry is also changing. “While the shift in demographics is fueling more demand for medical services; the way in which medicine is practiced, particularly from a cost side, is changing rapidly,” says Brophy. “One of the ways insurance and medical providers are attempting to contain these rising costs has been the implementation of telemedicine, i.e. over-the-phone/internet medicine. Additionally use of AI and machine learning, while still in its early stages of deployment, has seen a rapid expansion in use of its diagnostic capabilities with early results showing tremendous improvement in faster, more streamlined care. Operators/investors/owners of MOB assets will need to stay apprised of these advances, in much the same way retail is only now responding to the ‘Amazon’ effect, as they will, in turn, change the way care is delivered.”
Looking into 2020, Brophy expects the market to show a similar performance. “Given robust population and job growth should continue to propel the MOB market in both the near-to-medium terms. More than $1 billion of bioscience related projects are currently under construction, with more than $2 billion set to launch over the next couple years and expected to create nearly 7,000 new jobs once all projects are completed,” he says. “Major projects to watch include, ASU/Wexford’s 227,000 SF medical lab/office space in Downtown Phoenix’s Biomedical Corridor, Creighton University’s Medical School at Park Central and Mayo Clinic’s $600 million North Phoenix campus expansion.”