Macro indicators in the healthcare real estate sector point to continued near-term growth. Though there continues to be new construction of medical office buildings (MOBs) nationwide, local vacancy rates continue to drop due to high demand stemming from the country’s aging population and insured coverage rate.
In the third quarter, Atlanta MOB vacancy totaled 11.6%, down from 11.9% in the third quarter of 2017. With new buildings being delivered in 2018, such as the 125,000-square-foot MOB at Northside Forsyth, the 170,000-square-foot NSH Midtown MOB and 114,000-square-foot 371 East Paces Ferry, the drop in vacancy is greater than the percentage indicates. Additionally, Atlanta continues to be a target for institutional capital seeking to invest in the MOB market, as indicated by several large transactions in 2018. One example is Physicians Realty Trust’s acquisition of the new NSH Midtown building for $82 million.