At least two facts come together to make a very healthy medical real estate market:  (1) Houston leads the nation in population growth, and (2) the Accountable Care Act requires health care providers to improve care while reducing expenses.  The Greater Houston Partnership says healthcare payroll employment grew between June 2015 and June 2016 by 25,000 people.  With Houston being home to the world’s largest medical center - Texas Medical Center - taking advantage of the economies of scale leads to a strategy for many local health systems to proceed with mergers, acquisitions and expansions.  

In spite of low oil prices and related layoffs, Houston’s healthcare real estate market continues to expand as it responds to the city’s irrepressible growth. Although Houston’s office sublease space has increased to over eleven million square feet (as of early August 2016), medical office space being offered for sublease is only about one (1%) percent of that category.   Hoping to have an advantage over office buildings with lots of sublease space, some office buildings that were previously considered strictly office properties have started advertising their available space as medical-office buildings (MOB’s), particularly if it is located near a hospital or medical campus.  Demonstrating why landlords may want to call their property “medical,” in the first quarter of 2016, over 116,000 square feet of medical office space was absorbed – and because of the need for that kind of space, over two million square feet of medical office space is currently under construction in Houston. 

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