Houston’s Healthcare System Takes a Pause, but for How Long?

The Houston healthcare sector, like the overall market itself, witnessed incredible growth over the past decade. That activity came to a skid, however, leaving owners and occupiers attempting to navigate the choppy waters brought about by the pandemic. All market metrics—from absorption to vacancy to investment activity—either remained relatively stable or trended in discouraging directions, according to Q3 research compiled by Transwestern. For example, absorption during the quarter was less than that of a typical dialysis center, totaling just 456 square feet.
Granted, just barely positive absorption is better than negative, but that figure is tempered even further by the 70 bps quarter-over-quarter vacancy rate increase to 13.1 percent. One contributing factor to this rise in vacancy is the approximately 252,000 square feet of new healthcare space that came online, less than half of which was pre-leased. The largest delivery during the third quarter was Bissonnet Medical Plaza, a 53,000-square-foot MOB in the Bellaire submarket. All across Houston, multiple projects are in the pipeline that will add additional healthcare supply. In or near the TMC alone there are three hospital facilities now under construction, totaling more than 733,000 square feet. The largest of these is the 427,000-square-foot O’Quinn Medical Tower going up on the Baylor St. Luke’s McNair campus, scheduled for completion in early 2024. The two-building UTHealth Public Education Mental Health Hospital will comprise 220,000 square feet when it wraps construction this December. Slated to deliver in the fourth quarter of 2023, the MD Anderson Cancer Center Proton Therapy Center will occupy 86,500 square feet. Click to read more at www.rednews.com.