Encouragingly, vacancy rates for every submarket remained in the single digits for the ninth consecutive quarter, according to a fourth quarter San Diego medical office report from Cushman & Wakefield’s local medical expert Joe Zurek. At the end of fourth quarter 2020, San Diego’s medical office direct vacancy was 6.3 percent, up 50 basis points from last quarter and 90 basis points from a year ago.
San Diego County absorbed 153,000 square feet of medical office space in the quarter, bringing the year-end figure to 93,000 square feet of net positive absorption. Class-A properties experienced the most positive absorption at 118,000 square feet in fourth quarter. The 633,000 square feet of total leasing activity in 2020 was a 65 percent increase from 2019 total leasing activity.
While smaller providers have been able to shift locations, often toward high-quality healthcare assets, large provider groups have no viable options and were obligated to seek larger build-to-suit projects. Major health systems such as UCSD, Scripps, Kaiser Permanente, Sharp Healthcare and the Department of Veterans Affairs all have build-to-suit projects planned or under construction across the county. The Central Suburban submarket will add the most to inventory with 270,000 square feet under construction, all pre-leased with completion of 2021 or later.
Lisa Brown has more than 30 years of experience in corporate communications and marketing management with organizations including Grubb & Ellis, Marcus & Millichap and NAIOP.
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