The market for medical office and healthcare facilities in South Florida should continue to be strong in 2008. The market is benefiting from its proven stability in relationship to other types of real estate more sensitive to changes in the economy. Compared with standard office space, medical office vacancy and rental rates do not exhibit the highs and lows that conform to the economic cycles.

Rental rates continue to rise in prime locations. Although the general office condominium market is weakening, prices for well-planned medical office condos in strategic areas are holding firm. There are many ill conceived condo projects that have been unsuccessful. Many of these failed projects have been planned by developers who lack expertise in the local healthcare real estate market.

Whether the medical space is for lease or purchase, healthcare users should research the following:

• What is the developer’s track record? Look at past projects and talk to tenants or owners of the building.
• Does the location work? Great real estate deals may be terrible for doctors if the building moves them away from their patient base.
• Is there the right mix of tenants? A good building has users that compliment each other, creating a synergy.
• Is there enough parking? Make sure that the building can accommodate the needs for your employees and patients.

Consumer demand is driving significant changes in the healthcare industry. Healthcare services are appearing more in high exposure locations like retail environments. A prime example of this is the One Seventeen Professional Arts Center project at the Town & Country Shopping Center located in the West Kendall area of Miami. The medical office development within the retail center consists of two 4-story towers totaling 133,000 square feet. The shopping center is undergoing a $90 million renovation. The project is nearly sold out before completion. Shopping centers attract a tremendous number of visits (per person per year). While a patient is going for a medical procedure, other family members can shop or dine and then pick up the patient when they are done.

One of the key areas of change impacting healthcare facilities is the way services are being provided. In the past, healthcare services were provided in a centralized hospital setting. There is a trend for decentralization, and that is driving the need for more and different types of facilities. Medical office buildings are prime examples of this change. These facilities have evolved into more than just medical office space. Advances in technology means that tests, procedures and treatments once provided in a hospital can be delivered in an outpatient setting. In addition, baby boomers are requiring more healthcare and demand for outpatient facilities has climbed as both insurers and government agencies push doctors to perform lower risks procedures outside the hospital setting. Tenants of medical office buildings now include urgent care centers, ambulatory surgical centers, and diagnostic centers.

As rental rates continue to rise, the option to lease or purchase medical space in a prime location becomes increasingly more difficult for the healthcare professional. The key is to find the right the property in the right location at the right price. It is extremely important that the medical user gain as much knowledge as possible before a making a final decision.