Office development has returned now that vacancy rates have declined somewhat, but where is it headed? In Atlanta, development, especially in the north central area including Sandy Springs and Brookhaven, new buildings are being developed or planned, and vacancies are declining. Some experts feel that future growth will be driven by medical office space. This is not good news for general office development. It is estimated that more than two hundred million square feet of medical space will be needed in the next decade to service the aging U.S.. population. Health care spending, according to the U.S. Bureau of Labor Statistics is nearly double for the over 65 crowd, a group that is rapidly expanding in the USA. This is good news for the medical office sector which has always enjoyed a degree of stability and never experienced a negative year-over-year growth. Even the last depression showed growth in this sector. Investors and developers have always felt this is a segment of the market with stable returns and a better than average investment. The development of new hospitals, and expansion of existing in the Atlanta area are driving demand for new medical office spaces in nearby areas. We see this around Kennestone Hospital, near the offices of The Atlanta Commercial Group.
This trend does have its drawbacks. Retail developments are converting unused retail spaces for medical uses which competes with office space and office developers. A shortage of new doctors and health care workers could slow down growth. Also, innovation and efficiency in
medical practices might lower overall demand for space. Who knows what the government may do with healthcare policy? On the other hand, the aging population will continue to drive medical office demand. New construction has remained modest during this economic cycle, driven by memories of massive overbuilding in the office segment prior to 2008. Investors seem to be keen on medical office space as the yields are higher than the total office investment market. In the long run, increased demand and modest supply should make medical office space a must for investors looking for better returns in their portfolios. The northwest Atlanta area is blessed with a abundance of hospitals and medical facilities, and the Atlanta Commercial Group is well trained and knowledgeable in this segment of the market.
We have the skills and tools to assist developers in locating sites, as well as the databases to find just the right space to lease. Now is the time to invest so give the Atlanta Commercial Group a call.
