Every year for the last 10 year a group of commercial real estate professionals in Southwest Florida put on what is known as the CCIM Real Estate Outlook Conference. I’m proud to be the 2010 President and the Chairman of the REOC. Visit http://www.SWFLCCIM.com to learn more about the event and the SW FL district of the CCIM institute.
We recently analyzed the Lee County Florida medical office market. We compared the demand and pricing of areas within 3 miles of the major lee county hospitals. The areas we studied were around Lee Memorial, Cape Coral Hospital, Gulf Coast Medical Center, Health Park, and we also included the area around the former SWFL Regional Medical Center on Winkler Avenue.
The big picture across Lee County is that vacancy in still increasing and asking lease rates are decreasing, however, two of the markets we studied have sharply reversed the vacancy trend. The first one is not a big suprise to us, but the other one was a little bit of a surprise. The first area that started reversing the vacancy trend is the sub-market surrounding the newly expanded Gulf Coast Medical Center on Daniels Pkwy in Fort Myers.
With the next nearest hospital closing and the recent completion of this state-of-the-art facility it is no wonder that Doctors are moving into this area and filling the vacancy. In fact vacancy has dropped to 6% off from the peak of 14% in mid 2008. The Asking rates have followed this downward trend but we believe average pricing will probably start to increase once vacancy gets under 4%. This truly is one unique area in Southwest Florida that almost appears insulated from the rest of the market. And this is why we are excited about two medical parks that are right next to the new hospital facility. We’ll give you some information and links to the websites for those parks at the end of this video.
But right now we’ll talk about the second area which only recently reversed the vacancy trend. And that’s the area within 3 miles surrounding Cape Coral Hospital. Even though demand is not nearly as strong as the area around Gulf Coast Medical Center, the demand is growing. Vacancy has been reduced from 21% to 14% in just the last few months. This happened right around the same time total asking lease rates dropped under $20 a foot.
The increased demand around Gulf Coast Medical Center has mostly been caused by the recent closure of Southwest Florida Regional on Winkler Avenue to the brand new Gulf Coast Medical Center on Daniels Parkway.
The most affordable medical office spaces are in the area surrounding Lee Memorial with an average of $10.62 per sq ft as vacancy continues to climb and currently sits around 13%.
Out of all commercial real estate segments, medical is showing the strongest signs of increasing demand. As the economy recovers and the retiree population grows over the next several years. will likely increase rapidly over the next several years as the economy recovers and the retiree population grows. Lease rates are still low and practices should consider finding and securing the best location for the next 5 to 10 years.
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