Industry Trends Driving Demand for Twin Cities Medical Office Space; New Construction Ramping Up

  • At 9.7%, vacancy rate is at lowest point since second-half 2006
  • New construction—both on-campus and off-campus—has increased to meet growing demand
  • Healthcare systems continue to execute their strategic plans in preparation of healthcare reform
  • Continued consolidations and mergers of Twin Cities’ healthcare organizations are occurring, which has real estate implications

The Twin Cities multi-tenant medical office market continues showing strong vital signs and proving itself to be a strong asset class. The sector reported new pockets of leasing activity and increasing new development. Although quoted net rental rates were flat, landlords of well-positioned, well-maintained properties saw improvement in overall economics as the market continues to tighten.

Overall vacancy is 9.7%—the lowest since second-half 2006. Many on-campus or healthcare system-sponsored facilities are essentially full with eight hospital campuses reporting zero vacancy. Absorption in 2012 totaled 164,340 sf. Medical office space continues outperforming the general office market, which has a vacancy rate of 18%.

To read more, visit the January 2013 edition of Cushman & Wakefield/NorthMarq’s Compass report, now available online.  Visit the web site:

About Cushman & Wakefield/NorthMarq

​Cushman & Wakefield/NorthMarq is a joint venture formed in September 2011 by NorthMarq Real Estate Services and the Minnesota operations of global real estate services firm Cushman & Wakefield. By combining the talent of both organizations at the regional level with the global platform of Cushman & Wakefield, we offer clients the best combination of regional strength and global capabilities. The result: the leading commercial real estate firm by all measures in the Upper Midwest.
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