Medical office fundamentals continue to be solid after recovering from pandemic-era construction delays, with the sector posting historic starts. But as costs continue to rise, completions remain low, with experts predicting they are not likely to reach their pre-pandemic rates anytime soon.
The decline in completions has led absorption to outpace new supply as steady demand has kept occupancy consistently above 90%, according to new research from JLL.
"Medical tenants remain in place more consistently than other commercial tenants due to location of services and higher investment in their premises," the report states. "Compared to the commercial office sector as well as other preferred sectors such as retail, industrial and multifamily, medical office occupancy is routinely stronger, and the events of the pandemic caused less long-term disruption to the sector."
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