Medical Office Seen as a Smart InvestmentMay 1, 2013 – Article
Partner, Greenberg Glusker in Los Angeles
Medical office buildings and other healthcare-related office products are extremely meaningful components to the Los Angeles office market. According to CoStar, medical office space represents nearly 10 percent of the total occupied office square footage in Los Angeles. This figure is only exceeded by the financial services (including insurance and real estate), general services and legal industries.
Medical office vacancy rates in the Los Angeles region are less than 10 percent, which is substantially lower than that of traditional office space, which hovers near 17 percent. This number becomes even more significant when you realize that the compounded five year return for healthcare-related real estate was about 15 percent. This is compared to the compounded five year return for traditional office space, which is about 5 percent, according to the FTSE NAREIT US Real Estate Index. Medical office buildings also command higher rental rates than comparable office product, which increases their attraction for investors.