Where the Doctors Are in San Diego

Ross: “San Diego is the second most-expensive market in the country for healthcare providers, yet there is disparity between physician reimbursement rates in our community as compared to other similar counties with high cost of living and doing business.”

SAN DIEGO—The UTC submarket has by far the highest concentration of physicians in the county, while the entire 78 Corridor has had a disproportionately high amount of new medical-office development, JLL SVP Chris Ross tells GlobeSt.com. According to the firm’s Q2 medical-office report for the San Diego region, the four submarkets with the lowest vacancy rates are Kearny Mesa (4.1%), East County (5.0%), South County (5.7%) and Uptown/Hillcrest (6.2%), mainly due to next-to-nil development of multi-tenant medical-office product in these communities over the past 10 years.

The report also revealed that 2017 will likely come to a close with record-setting medical-office investment metrics across the board in sales volume, cap rate and price per square foot. Moreover, 10 years ago, there were only three or four MOB owners that were institutional, multi-market players that specialized in healthcare, whereas today at least a dozen of these firms own healthcare real estate in San Diego County. Welltower, Ventas, CNL, Anchor, Carlisle, Northstar, ARC and Virtus have all acquired medical buildings recently, and nearly every other household name wants to join the party.