How have the fundamentals held up in fast growing markets? In the chart below, we are showing the 10 metro areas with the largest MOB inventory growth over the past 5 years. Only the top 50 largest markets were considered, so we are focusing on well-established areas. Raleigh showed the largest relative growth with an 18.5% increase in MOB space over the past 5 years. That is 2.5x the rate of growth for the Top 50 metros as a whole. Over that period the average rent in Raleigh increased 24.7% and occupancy deteriorated by 20 basis points. Despite the large increase in supply, most of these markets managed to become tighter. A few standouts are Phoenix and Charlotte, which have increased their occupancy rates by 3.2 percentage points and 2.3 percentage points respectively. In general, these high growth markets fall into the southern half of the country, with Columbus, OH being an exception. Make sure to keep an eye on these markets, as some will level off, while others will continue their rapid pace of growth.
