Colliers Houston Healthcare Market Report | 2023 Second Half

Key Takeaways

  • Houston ranks No. 1 in total SF for both construction and net absorption among the top 50 MOB markets nationally
  • Vacancy drops
  • Positive absorption 12th straight quarter
  • Construction down YoY, but deliveries nearly double

Houston Highlights for MOB

Houston’s medical office building (MOB) market experienced strong activity in 2023, recognized as the No. 1 market in terms of net absorption and construction among the top 50 MOB markets nationally. The market posted 900,641 SF of positive net absorption in the second half of 2023, increasing 14.4% from the first half. The annual total of 1.7 MSF represents more than double the previous year’s 741,496 SF. The vacancy rate fell to 10.9%, dropping 100 bps from 11.9% a year ago. New MOB inventory completed during the second half of 2023 totaled 637,340 SF, dipping slightly from the first half; completions totaled 1.7 MSF during 2023, more than double the 736,694 SF from 2022. Buildings underway have declined to 2.1 MSF at yearend compared to 3.1 MSF at year-end 2022. In the second half of 2023, the average asking NNN rental rate declined slightly to $23.52 from $23.62 in the first half and is down 8.8% from $23.72 YoY.

2023 H2 Healthcare Houston Report Colliers

Market Indicators

Historic Comparison- MOB Only

Market Fundamentals

Vacancy rates for MOB buildings have dropped below 11.0% for the first time in five years, decreasing by 100 basis points year-over-year to 10.9%.

Net absorption of 1.7 million square feet outpaced the total 1.4 million square feet of new deliveries during 2023.

Recent Transactions

Under Construction

100,000 SF or Greater

Texas Medical Center Update

The Texas Medical Center (TMC) recently celebrated several grand openings. MD Anderson opened an expansion to its Proton Therapy Center including a new 106,000-square-foot building.

TMC celebrated the grand opening of Helix Park, its new 37-acre research campus which will support a collaborative mix of healthcare, life science and business users. The park is shaped around a double-helix green space, representative of a DNA structure. Each Helix Park building is designed with public retail in the front and parks in the middle.

Open in late 2023, Phase I’s two buildings include the fully leased 250,000-square-foot TMC3 Collaborative Building and the 350,000-square-foot Dynamic One research building, which is 62.1% leased. Five public parks within the new development are open to the public, as are the ground floors of the two new buildings. Under construction is another 138,000-square-foot, mixed-use building while a 521-room hotel and a 50,000-square-foot office building are both proposed for the next phase.

The economic advantages of Helix Park are estimated at an annual impact of more than $5.4 billion with the addition of more than 23,000 permanent new jobs.