The South Florida Medical Office Report The South Florida medical office market experienced a significant amount of volatility during 2012. Healthcare providers took measures to improve their bottom line which included taking a hard look at their rental expenditures. Building owners were forced to be more aggressive in order to attract and retain quality tenants. As individual practices are rolled up into larger groups, lease negotiations are more often conducted by savvy practice management and real estate professionals.
Our first annual South Florida Medical Office Report breaks down the medical office market for the tri-county region. Buildings that are 10,000 square feet or larger and occupied 50% or more by the healthcare industry were included. Medical research and industrial facilities were not included. This report encompasses 287 medical buildings totaling approximately 11,528,478 square feet. The table below depicts how the medical space is divided between the tri-county region.
County Square Footage
Miami Dade 4,123,517
Broward 3,462,292
Palm Beach 3,942,669
Total 11,528,478 Square Feet
The vacancy rates across the South Florida region, currently averaging 27%, have trended higher over the last three (3) years. The vacancy rate in Miami Dade County is 25%, while Broward and Palm Beach Counties are at 27% and 28% respectively. The medical office market trails the rest of the commercial real estate sector in a weak economic environment. As the economic outlook improves, the medical office sector is slow to react. We are currently in this phase of the cycle, but with the added ramifications of the impact of the healthcare law reforms and the resulting medical practice consolidations that are taking place, absorption rates will be slow.
Submarket Spotlight
Submarket Vacancy Rate
Kendall 13%
Aventura 14%
Miami 24%
Pembroke Pines 23%
Plantation 32%
Coral Springs/Tamarac/Margate 16%
Boca Raton 19%
West Palm Beach 33%
Jupiter/Palm Beach Gardens 29%
Gross rental rates vary based upon the class and age of buildings and the dynamics that exist in each submarket. The average rental rates for each county are depicted in the chart below.
Expect positive absorption of two to five percentage points in the coming year as the medical office market stabilizes and medical groups take advantage of attractive lease rates and incentives. Markets with strong payer mixes and demographics will lead the way, but rental rates will be further squeezed as landlords compete for a decreasing pool of medical office tenants.
Florida Medical Space is pleased to provide more detailed submarket snapshot reports to our clients who own or are looking for commercial property in South Florida.
