Medical Office Report 2024

MEDICAL OFFICE REPORT

PRESENTED BY: Marisa Weber Commercial Advisor 316.337.5967 mweber@naimartens.com

State of the Market National Trends This report aims to delve into the local trends and activities within the Wichita market, while also shedding light on some national trends. It's important to note that economic conditions often have little sway on health-related needs. Regardless of economic ups and downs, patients require treatment for illnesses, chronic conditions, injuries, and other health issues, ensuring a steady demand for medical services. This resilience has been a hallmark of the medical office sector, consistently offering attractive returns with minimal volatility across economic cycles.

Throughout the COVID-19 pandemic, demand for medical office buildings (MOBs) remained robust, with vacancies maintaining pre2020 levels. Consequently, medical offices continue to provide some of the most favorable long-term, risk-adjusted returns among major property types.

By the Numbers Both occupancy expansion and rental rate growth have been on a steady upward trajectory for several years. In the fourth quarter of 2023, the national occupancy rate stood at 92.8%, continuing the upward trend that began in the first quarter of 2021 and marking an increase of 160 basis points since 2021.

Favorable Demographics The ongoing demographic phenomenon of macroeconomic population aging, alongside the sustained expansion of the healthcare sector, will continue to underpin industry growth not only through 2024 but also well into the foreseeable future. The pronounced shift towards increased healthcare utilization and expenditure remains a primary driver of this expansion. This trend is further compounded by the proliferation of outpatient facilities, exemplified by the notable expansion of ambulatory surgery centers, which underscores the persistent demand for quality healthcare real estate (HRE) space at a notably accelerated pace.

Workforce is a Headwind However, a notable obstacle to sectoral expansion lies in the realm of labor.

While the expansion of healthcare services persists, the recruitment and staffing of personnel for newly established facilities have presented significant challenges.

Investment Oppourtunities In terms of prevailing trends in location selection and asset categories, there persists a discernible preference for high-quality assets within major metropolitan markets. Paradoxically, there has been a concurrent surge of interest and activity in tertiary market rental rates, occupancy levels, and transaction volumes. The robust fundamentals characterizing these markets, coupled with a scarcity of viable opportunities, have prompted available capital to explore alternative investment avenues.

Looking to the Future

Plans for the downtown Wichita biomedical campus continue to move forward. The $300-million project should be open in time for the fall semester in 2026

Construction Activity Timeline Medical Office Projects 2024

2022 The

Kansas

Andover

College

Osteopathic opened

it’s

welcomed

Optometry

of

break

Medicine

Family

plans

ground

to

in

the

doors

and.

summer of 2024 on an

the

first

11,400

SF

office

in

inaugural of 85 students in

Wichita’s The Heritage

August. The college now

Development, with the

serves

goal of opening a year

close

to

600

later

students.

2025 COMCARE

2023 Redbud

Pediatrics

of

Sedgwick

County purchased property at 235 S. Topeka. It will be broke

the

home

of

multiple

ground for a new 13,000 SF

programs

including

location

in

Maize.

To

Community

Crisis

improve

the

future

by

and

Sedgwick

the

Center County

making kids stronger and

Offender

healthier;

Program. Plans are for an

opening

anticipated for 2024.

is

Asscessment

opening in conjunction with phase

one

of

biomedical campus

the

2024

MARKET

OVERVIEW

FEATURED NAI MARTENS MEDICAL OFFICE LISTINGS FOR SALE/LEASE

494 N 127th St, Wichita, KS 67206 5,000 - 20,000 SF

FOR LEASE

FOR LEASE

FOR LEASE

1035 N Emporia

7329 W Village Circle

1629 Freedom St

Wichita, KS - 3,431 SF

Wichita, KS - 4,927 SF

Derby, KS - 5,215 SF

Please contact NAI Martens today if you are looking for medical office space and/or have a medical building with any vacancies.

2024

MARKET

OVERVIEW

FEATURED MEDICAL PROPERTIES IN WICHITA UNDER CONTRACT

9727 Shannon Woods

FOR LEASE

Wichita, KS - 16,454 SF on 3.96 Acres

Northeast Vacancy Rate: 6.4% Asking Rate: $17.58

9300 E 29th St N, BLDG 300*** Wichita, KS - 18, 274 SF

FOR LEASE

Northwest Vacancy Rate: 17.30% Asking Rate: $16.08 Southeast Vacancy Rate: 13.35% Asking Rate: $14.36

10111 E 21st St N*** Wichita, KS - 23,558 SF

FOR SALE/LEASE

FOR SALE

FOR LEASE

Southwest Vacancy Rate: 2.30% Asking Rate: $18.00 8110 E 32nd St N

2929 E Central Ave***

1245 N West St***

Wichita, KS - 26,170 SF

Wichita, KS - 15,000 SF

Wichita, KS - 9,774 SF

Properties indicated by *** are not listed by NAI Martens. Contact us at 316-262-0000 for questions.

NAI Martens is the largest full-service commercial real estate firm in Kansas. Founded in 1948 and headquartered in Wichita, NAI Martens provides a vast array of commercial real estate services throughout south-central Kansas. President Grant Glasgow, SIOR leads a team of professionals with over 150 years of combined commercial real estate experience.

Member of NAI Global with 300 + Offices Worldwide FOLLOW US!

“Marisa has been wonderful to work with. She is incredibly knowledgeable and responsive. Marisa is doing a great job for us!”

-Elyssa Carter, Director, Real Estate- Kansas, Oklahoma, Medxcel Real Estate

1330 E. Douglas | Wichita, KS 67214| 316-262-0000 THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES DEEMED TO BE RELIABLE, BUT NO GUARANTEE OF ITS ACCOURANCY IS MADE BY NAI MARTENS