MEDICAL OFFICE OUTLOOK Our Medical Office experts at Colliers | Columbus specializes in the leasing and sale of medical office properties across Central Ohio. Healthcare providers, practice groups, owners and investors rely on our team for in-depth market knowledge and strategic guidance tailored to the unique needs of the healthcare real estate sector. What differentiates medical office brokerage from other commercial real estate service lines, and how do those differences influence the space needs, design considerations and operational requirements of medical office tenants? Medical office brokerage differs from other commercial real estate service lines due to the specialized nature of healthcare users and their operational requirements. Medical tenants typically require highly customized buildouts, often involving significant upfront capital for infrastructure, regulatory compliance and clinical functionality. As a result, these users tend to favor longer lease terms to amortize their investment and are generally less mobile than traditional office tenants. While this often requires greater initial capital from landlords and investors, it is typically offset by lower rollover risk and more stable, long-term tenancy. - Corey Taber, Vice President How do macroeconomic factors, such as changes in insurance legislation, impact your business and influence tenants’ expectations? Macroeconomic factors play a significant role in shaping both tenant behavior and real estate strategy in the healthcare sector. Over the past year, uncertainty around Medicaid reimbursement has materially slowed growth among providers in the behavioral health and addiction treatment sectors. Additionally, state-level reimbursement structures heavily influence site selection decisions for regional and national healthcare operators, particularly in sectors such as autism therapy. These variations can meaningfully impact provider expansion strategies and have contributed to uneven access to care across state lines. - Corey Taber, Vice President
22 | Annual Columbus Office Tenant Report
How are rising construction costs affecting leasing decisions and space requirements for medical office users? The tenants are needing to either extend lease term to amortize the construction cost over a longer period, or they contribute their own TI funds to make it work. Lease terms are trending longer, with 7–10 year deals now more common than the prior 5–7 year range. - Chris Potts, Senior Vice President As Columbus’ major healthcare systems continue to expand, how has that growth influenced speculative medical office construction, if at all? While healthcare system investment and expansion in Columbus remains strong, it has not translated into a meaningful increase in speculative medical office development. Unlike general office, medical office space is highly specialized and often designed for specific clinical users, which makes speculative development more difficult to underwrite. That said, in Columbus and other major metropolitan markets, we have seen successful examples of multi-tenant medical buildings delivered with flexible infrastructure and competitive tenant improvement allowances. When paired with an anchor tenant that has a meaningful footprint, this approach can be an effective strategy for developers while still accommodating a broad range of medical users. - Corey Taber, Vice President