The Fayette/Coweta County medical office building (MOB) sub market with 880,000 square feet is located along the Hwy 54 and Hwy 34 corridor form Fayetteville to Coweta Counties in South Atlanta. The largest concentration of space is located around Piedmont Fayette Hospital. The anticipation of the new 9 story, 136 bed hospital in Newnan has created a new emerging market along the Hwy 34 corridor, in Coweta County from Peachtree City west to Newnan (and the older Piedmont Newnan Hospital). Due to the economic downturn the new hospital’s 2010-2011 start date is in question, which has also caused many independent medical office developers to put some plans on hold. Like many outlying suburban medical markets, MOB vacancies are hovering over 20%. Prior to 2007 vacancy rates remained at 6% to 8% for several quarters. After the delivery of 76,000 square feet in three properties in 2007 along with absorption of only 20,000 square feet vacancies climbed to 10%. When the 100,000 square foot MOB at 1280 E Hwy 34 was completed in 2008 at only 10% preleased vacancy rates jumped to 20% overall. While no new buildings have come on line in 2009, the lack of any real net positive leasing activity has kept vacancy rates high, which leaves over 180,000 square feet of vacant space in many suites across all classes of medical office buildings.
Any healthcare provider looking for medical office space in this market will find great deals as landlords become more aggressive in leasing incentives. In fact average quoted rates have been declining for the past several quarters from over $24.75 per square foot to $22.50 in the current quarter. The spread of rental rates between properties based on location, building quality and amenities is $14.50 to $26.50 per square foot. Many higher end medical office buildings are providing incentives that effectively put occupancy costs in line with middle grade properties. Operating expenses can possibly add over $8.00 per square foot are also currently negotiable based on the type rate being quoted.
Recent notable deals completed by healthcare groups to take advantage of the down market for building owners include: Central Home Health Care Amedisys (2,500 SF, 1825 Building, Newnan), Fayette CARE Clinic (2,278 SF, Fayette Professional Center, Fayetteville) and Fayette Piedmont Wound Care (6,010 SF, Piedmont Fayette Physicians Plaza, Fayetteville). We anticipate additional activity in 2010 based on advantageous lease terms and local favorable demographics.
For a complete report of supporting data and/or request a market study for areas not yet reported on this blog please give us a call or email Richard Smith. We can also provide complete full market research studies including demographics, available spaces, lease rates, operating expenses, sales comparables and tenant rosters of medical office buildings across the Southeast Region. We work with health care professionals evaluating real estate options.
