MOB Central Perimeter Market Report – Mid Year 2009

The Central Perimeter medical office building market is located at GA 400 and I-285 around the areas three primary hospitals: Northside Hospital, St Joseph’s Hospital of Atlanta and Children’s Health Care of Atlanta at Scottish Rite.  The area commonly referred to as Pill Hill has 21 MOBs totaling 2.2 million square feet located both on campus and off campus of the major hospitals.  There is approximately 61 spaces available ranging from less then 1,000 SF to over 20,000 SF for a total of 337,835 vacant square feet.

During the past 4 quarters negative absorption has driven down occupancy rates from a high of 87.5% to the current rate of 84.9%.  Looking back further however, occupancy rates have remained stable due in part to a net positive absorption of 120,000 square feet.  One new development at 1140 Hammond Drive totaling 57,637 was delivered in June of 2008.  Two traditional office properties were renovated for medical use: Glenridge Medical Center totaling 96,000 SF in August 2008 and 1100 Johnson Ferry Road totaling 348,781 SF in February of 2009.  As these MOBs lease up, overall all occupancy rates are expected to climb back to 87.5% by mid-year 2010.

In three years prior to 2Q 2007 average quoted rental rates including operating expenses remained in the $22.50/SF range.  Since then however, with the continued demand and limited development opportunities average rates have climbed by $4.00/SF to the current recorded high of $26.48/SF.  We anticipate average rental rates will continue to increase reaching $28.00/SF by year-end 2010.  In fact many class A MOBs in this market have already surpassed this rate on current lease transactions.

Give us a call or email Richard Smith for detailed information on these or any other medical office buildings in the Southeast Region. We can also complete full market research studies including available spaces, lease rates, sales comparables and tenant rosters.