Medical and life science offices continue to be a seriously high-performing subcategory of the office market. In just the first two months of 2022, they accounted for nearly $12 billion in transactions in the U.S. This despite the fact that offices as a whole are still facing a high vacancy rate of nearly 16%.
Of course, not every market is benefiting equally.
Major price differences across life science hubs
If we look at sales price per square foot, three of the top five most expensive markets were also among the top five life science clusters in the U.S. These markets were:
- New York City - $1,885/sf (Manhattan specifically) - #5 ranked cluster
- San Francisco and The Bay Area - $934/sf and $591/sf respectively - #2 ranked cluster
- San Diego - $576/sf - #3 ranked cluster
However, there were also exceptions to the high cost/top cluster correlation. Boston recorded a sub-national average $234/sf price, despite holding the number one cluster spot. Meanwhile, Charlotte, North Carolina, recorded a premium price of $605/sf despite not actually making the cluster top ten list at all.
No sign of a cool-off in sight
By the end of February 2022, no less than 16 million square feet of properties with planned medical office space were already under construction. It’s a blistering pace. But as long as the imbalance between the medical office subsector and offices as a whole persists, there’s no reason to expect things to slow down.