Medical Office Market in Good Health in DC Region

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There was positive demand for medical office properties in the Washington, D.C., region in 2022, according to JLL’s latest medical office perspective for the D.C. metropolitan area.

In fact, after losing ground in 2021, last year ended with nearly 400,000 square feet of net occupancy gains, while total vacancy reached 10.9 percent, its lowest level since 2018.

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“The D.C. metro offers a combination of a strong payer mix, a high median household income, and a solid network of hospitals, health systems, and private health care providers that offer choice, convenience and high quality of care to the population in this region.” Matthew Coursen, JLL’s mid-Atlantic health care lead, told Commercial Observer. 

With hospitals like INOVA and VHC Health, and practice groups such as Virginia Heart and Capital Digestive Care, leasing space for ambulatory clinics closer to patients has led to an uptick in occupancy and allowed the demand to be met in many D.C. submarkets, Coursen noted. 

Some of the notable medical leases in 2022 included Prince William County Crisis Receiving Center’s 78,925-square-foot lease at 14041 Worth Avenue in Woodbridge, Va.; INOVA’s 25.592-square-foot lease at 8280 Willow Oaks in Fairfax, Va.; Iris Therapy Services’ 4,184-square-foot lease at 2000 North 15th Street in Arlington, Va.; Nuvia’s 4,580-square-foot lease at 4825 Mark Center in Alexandria, Va.; and DC Internists’ 4,337 renewal at 2021 K Street NW in D.C.

Despite economic headwinds in D.C., job postings for health care occupations ended 2022 well above the three-year average according to the report.

“The employment trends we see are signaling that most health care providers in the D.C. metro region continue to struggle to fill open positions for nurses, doctors and physicians assistants, both on and off campus, in a cost-effective way,” Coursen said. “This is contributing to extreme margin compression for most of these organizations but especially nonprofit hospitals.”

The development pipeline is also strong with Trammell Crow Company’s 124,000-square-foot The Wellness Center at West Falls in Merrifield, Va., and UMD Medical System’s 60,000-square-foot medical building in Laurel, Md., both expected to come on line in 2023.

“Strong population growth that is projected for the Medicare population should allow the health care sector to continue its strong growth trajectory in our region for the foreseeable future,” Coursen said. 

Keith Loria can be reached at Kloria@commercialobserver.com.