After a several year upward trend in new medical office construction starts, 4Q22 will see a slight tick down in the annual run rate. In 2022, 24.7 million square feet broke ground, down 6% from third quarter. This is the first time we have seen a decrease in MOB starts since the initial onset of the pandemic in 2020 when many projects were (some temporarily) put on hold. Despite this decrease, the total for the year is still ahead of the typical run rate before the pandemic. We’ll have to see if this develops into a trend into 2023, but we know even with the high demand for outpatient space, headwinds have faced the construction sector for a number of quarters. High costs, labor shortages, and now rising interest rates are likely to have some impact.
Construction deliveries also slowed in the quarter to 15.6 million square feet, down 16% from 3Q, suggesting continued delays in completions. This keeps the total pipeline at about 51 million square feet, a recent high watermark. Look out for the 4Q Subscriber Webcast in January when we will dig into this and more 2022 trends!