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California  + San Diego  + Healthcare  | 

SD Remains Primed for Further Life-Sciences Growth: JLL Research

When the Scripps Research Institute and public research institution University of California, San Diego are the center of your life-sciences ecosystem, the spokes from that hub are likely to be additive, if not transformative.

New research and analysis from JLL’s “Q4 2021 San Diego Medical Office Report” further prove the above point. Access to the full report is HERE, with a low-hurdle email necessity. 

Some high-level takeaways, via a news release from JLL:

  • Nearly 280,000 square feet of medical space was absorbed in 2021 on a net basis – a 77% increase from 2020. 
  • After its slight uptick in 2020 due to a short-lived spike in new deliveries, vacancy continues its steady downward course. It dropped two full percentage points in 2021 and now sits at 5.8% – the lowest point since 2006.
  • 2021 marks the tenth straight year of growth in San Diego’s average asking rent across all classes. It rose another 5.5% on the year and is now approaching the $4.00 FSG mark.
  • There is currently less than 100,000 square feet of MOBs under construction in San Diego County – on par with the lower levels seen during the Great Recession despite today’s relatively strong demand for space.
  • All-time-high construction prices are impeding new development, but eventually the lack of supply, rising rents and/or a flattening or dip in the cost of materials should open the door for speculative or semi-speculative construction. Until then, conversion of office and retail space will remain the primary solution to the imbalance in supply and demand.
  • Medical office sales across the country totaled $19.6 billion in 2021 – an all-time high that demonstrates the acceleration in investor appetite for this stable real estate investment class. Portfolio sales hit record levels as well with $7.7 billion of trades, representing nearly 40% of total medical office sales.
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