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— Health Care Properties Quarterly — June 2016
D
enver’s medical office mar-
ket remains healthy, accord-
ing to recent reports noting
improvements in construc-
tion activity, investment
activity and rental rates.
CBRE’s most recent report, from
fourth-quarter 2015, noted that the
average direct asking lease rate
increased to $27.34 per square foot
full service gross quarter over quar-
ter, representing an increase of 3.1
percent year over year. The reported
also noted that overall direct vacan-
cy decreased to 9.6 percent in the
quarter – a 19 basis point increase
year over year.
Additionally, construction activity
ended the year at 325,000 sf.
Investment sales ended 2015 with
$87 million transacted. CBRE expects
an increase in transaction volume in
2016, pushing activity to 2014 levels
when more than $120 million was
closed.
“Strengthening fundamentals and
continued economic progress will
afford new opportunities to upgrade
the health care system, allowing
investors and lenders to drive trans-
action levels up,” according to CBRE.
NewMark Grubb Knight Frank’s
first-quarter 2016 medical office
building submarket report noted
that total vacancy was 8.74 percent
with on-campus properties ending
the first three months of the year
with a 5.37 percent vacancy fig-
ure. The central submarket, metro
Denver’s largest medical office
submarket with 3.29 million sf in
52 buildings, had one of the lowest
vacancy rates of all the submarkets
surveyed at 5.39 percent. The high-
est weighted average rental rates
(full service gross) were seen in the
Parker/Castle Rock submarket with
a rate of $28.32. Overall weighted
average rental rates ended the quar-
ter at $24.25 across the metro area,
with on-campus properties averag-
ing $28.99 versus $23.13 to their off-
campus counterparts.
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Market Update
