If you think you see a medical office building on just about every other corner, you’re not dreaming.
Central Indiana has at least 265 such buildings, with a total of 9.5 million square feet of space, according to a recent report from Colliers International’s Healthcare Practice Group in Indianapolis.
And more are popping up every year, adding to the inventory and keeping the market competitive.
As construction goes, it's pretty low-key stuff. Many of the buildings are low-slung, one- and two-story deals without the glitz of a downtown office tower or the sparkle of a new high-end retail center.
Even so, vacancy rates are falling and rents are climbing—not by huge amounts, but enough to keep property owners smiling. Demand for space is so strong that many buildings are fully leased.
The average vacancy rates clocked in at 11.5 percent this year, slightly down from 11.7 percent last year. The lowest vacancies are in Hendricks County (3.6 percent), the northeast side (7.9 percent) and Carmel (8.1 percent).
At the other end, the highest vacancy rates are the west side (22.3 percent), the east side (21 percent) and the Meridian corridor (15.4 percent).
“Higher vacancies [are] typically seen in older buildings that are more difficult to adjust to evolving clinical service needs and new technologies,” said the report, which was researched by Tim Norton, R.J. Rudolph and James Winkler.
Average rents edged up as well, from $19.70 a square foot last year to $20.52 a square foot today. That made it the third consecutive year that rents grew.
The priciest areas are the Downtown/Midtown district ($24.48 a square foot), Fishers/Noblesville ($23.96) and the northwest side ($23.59).
The forecast? “Average asking rental rates should remain relatively flat or increase moderately in the next 12 to 24 months.”
And new medical official buildings are springing up every year, with developers trying to get the choicest locations near high-income neighborhoods, often near other hospitals and clinics.
Cornerstone Cos., an Indianapolis developer and property manager that specializes in health care, says it typically builds two to four new projects a year.
The company is not building huge high-acute clinics. What it is building is lots of outpatient clinics, where doctors can do procedures that a decade or two ago would have been done in full-service hospitals, such as knee replacements. The patient can often go home the same day.
“Health care space continues to grow, but it’s the smaller outpatient facilities that you’re going to see more and more of,” said J. Taggart Birge, president of Cornerstone.