Why is Medical Office Space a Great Investment?

Why is Medical Office Space a Great Investment?

If you’re considering purchasing an investment property, the medical office space sector of the real estate market is not one that you should overlook.  A lot of investors get scared off by the specialized infrastructure that is required in medical real estate, or by the fact that owning a medical office space can require a bit more time and effort from a managerial standpoint.  When you look beyond these things, however, you see all of the reasons that medical office space remains a quality investment.

Stability of the Market

The medical office space sector is one of the most stable in the entire real estate market.  Why?  Because there will always be the need for medical offices.  It is the one real estate niche that is largely unaffected by fluctuations in the economy.  No matter what’s happening on Wall Street, people will still be visiting doctors, dentists, and specialists in every town and city.  This fact has never changed and likely never will.  For this reason, getting your foot in the door in medical office space investments now is the best possible time.

Supply & Demand

medical office space investmentMedical office space remains in high demand, even when other sectors might wax and wane.  In fact, as the population continues to increase, the demand for available medical real estate continues to rise as well.  There is not, however, the supply of available space out there to meet this ever-expanding need.  In fact, over the past five years, there has been less than 1% growth of new buildings in this sector.   Low supply and high demand put you, the investor, in the perfect position to find the right tenant who will remain in your space for a long time to come.

Tenant Retention & Vacancy Rates

Speaking of tenants, medical office space has one of the strongest retention rates in the entire commercial real estate market.  In fact, vacancy in medical office space remains at an all-time low.  This is due to many factors, some of which we’ve already discussed.  For one thing, increased demand for vacant properties leaves many tenants eager to sign on for longer leases, knowing that they can secure their space for longer.  This is particularly true if the investment property is in an ideal location that can easily cater to the needs of the practices patients.  Another reason that tenants stay longer in medical office space is the amount of changes that need to be done to make the space ideal for their needs in the first place.  A medical office redesign is a lengthy and potentially very costly undertaking.  Your tenant put a lot of thought and effort into the strategic placement of medical equipment, treatment rooms, and even their reception area.  The thought of going through the process again can be the cause of a lot of headaches so many tenants in this sector are perfectly content to stay put.  This is great for you, the landlord, because you won’t have to spend any time worrying that your property will be vacant for any long stretch of time.

Stable Cash Flow

Due to many of the factors we have discussed, investing in medical office space is a great way to ensure stable cash flow coming in from your investment property.  As previously mentioned, tenants in this sector are much more willing to agree to longer lease terms.  In fact, the average length of a lease for medical office space runs about 7-10 years, as opposed to the 3-5 year leases associated with traditional office space.  This means that you are guaranteed income from your property for a much longer amount of time.  Another reason this type of investment stabilizes cash flow is the supply and demand factor.  As there becomes greater need for medical office space and less and less of it available for occupancy, rental rates in any given area will continue to rise.  This means that you are sure to get a great return on your initial investment, no matter what.

Looking for Medical Office Space in Tampa or the Surrounding Areas?

Now that you have a better understanding of why investing in the medical office space sector of the commercial real estate market is the right move, it’s time to find your perfect investment property.  John Milsaps has dedicated the past decade to understanding all of the nuances of the Tampa Bay medical office market, making him a specialist in this niche.  He will work diligently to help you navigate the current available properties, and won’t stop until he knows you are one hundred percent satisfied with your new space.  Take a look through some of his currently available properties, and reach out to get your search underway.

About the Author
John Milsaps, a Senior Advisor at SVN Commercial Advisory Group, specializes in landlord and seller representation in Tampa's professional office and healthcare real estate sectors. His expertise in commercial office space makes him a trusted advocate for clients seeking strategic real estate solutions.