Many end-of-the-year reports indicated that despite recent return-to-office (RTO) mandates, nearly 25 percent of all office space is vacant, including across Texas. This tracks with numbers from Coworking magazine, which claims that almost 15% of the state’s residents are remote workers. This includes many folks who moved to Texas during the pandemic, resulting in 1.6 million new residents since 2020.
Offices are also more empty because the population is retiring. Census records show that by 2030, 20 percent of Americans will be age 65 or older, and requiring more healthcare.
To that end, to counteract decreasing office property values, many investors are looking toward medical office buildings (MOBs) as the next commercial real estate opportunity. MOB growth is especially strong throughout Texas. According to Colliers, in 2023 Houston ranked No. 1 in total square feet for medical construction and net absorption rates. Dallas-Fort Worth and San Antonio posted strong numbers as well. Tyler’s healthcare real estate presence is growing also, due to the city’s status as a medical hub for East Texas.
Unlike traditional office work which can be done remotely, most healthcare must still be done in-person. This consistency for market demand, combined with the likelihood of medical tenants committing to long-term leases, reduced operational costs and less management responsibilities, make MOBs a popular investment.
Another key component in the rising popularity of medical office buildings is the integration of MOBs into mixed-use properties, often called “medtail.” The location of these properties can make them more accessible and convenient for the aging population. Texas is at the forefront of this trend and is poised to lead for years to come.
