Occupancy rates reached 96.4% in 2008, however, with physician groups downsizing in recent years, the occupancy rates have dropped to the current average of 90.2%. While Decatur is part of the Northlake submarket, the current occupancy rate is the healthiest of the 10 major medical submarkets. Recent negative absorption trends along with no deliveries are the cause of this downward pressure on the occupancy rates. In each of the past five quarters leading to 1Q2011 there has been negative absorption—a loss in total leased spaced averaging -13,650 per quarter. With recent leasing inquiries we see this trend reversing with positive absorption and an uptick in occupancy rates.
Rental rates have fluctuated over the past few years depending on the availability of space in each medical building. Typically the on campus MOBs are quoting rental rates of $21.00 to over $23.00 per square foot. Off campus, lower end medical buildings, while still an excellent alternative are quoting rates of $16.00 to $18.00 per square foot. Decatur is typically a full service market were rental rates include operating expenses, taxes, insurance and common area maintenance. The current quoted average of $20.18 per square foot has fluctuated by approximately $.35 per square foot over the past several years. Rental concessions and free rent can reduce occupancy cost by $1.00 per square foot depending on term and tenant improvement allowances. Decatur is a great alternative for medical groups looking for economical space in a unique urban environment.
For a complete report of supporting data and/or request for a market study for areas not yet reported on this blog, please give us a call or email Richard Smith, CCIM. We can also provide complete full market research studies including available spaces, lease rates, operating expenses, sales comparables and tenant rosters on medical office buildings across the Southeast Region. We work with health care professionals evaluating real estate options
