CoStar
New medical office space is on its way to the Washington, D.C., area as demand for the limited amount of available supply remains healthy.
Three built-out medical speculative suites at 2 Wisconsin Circle in Chevy Chase, Maryland, are set to be completed in the third quarter, according to JLL, the firm marketing the spaces. Slated to range in size from nearly 1,700 square feet to about 2,500 square feet, they are expected to be the only medical spec suites available in affluent Chevy Chase, the real estate services firm said.
The spaces have yet to land a tenant, but there is high confidence the suites will be leased up before they are completed in October, JLL's Andy Thau and Conn Curry told CoStar News in an interview Tuesday.
The brokers said leasing already built-out space can save medical tenants time and money.
Combined, the cost to create the suites totaled about $175 per square foot, the JLL brokers said. Once the first three suites are leased, the plan is to roll out three more suites around the same size at the property.
The 235,000-square-foot 2 Wisconsin Circle building was constructed in 1985 along the Wisconsin Avenue thoroughfare near the Maryland D.C. border. Chevy Chase Land Co. owns the property.
The Chevy Chase neighborhood faces an office vacancy rate of 24.1%, compared to the regional average of 17.3%, according to CoStar Market Analytics. The current average asking rent in the area is $43 per square foot.
Unlike traditional office space, the appetite for healthcare-related space remains robust in the Washington market, according to CoStar.
"Strong population growth, high median incomes, and an aging population fuel the demand for medical office space in DC," according to Melina Duggal, CoStar's senior director of market analytics for the D.C. area. "Industry trends, such as the shift towards outpatient facilities, also impact the demand for space."
Healthcare providers are increasingly seeking space near their patient populations, but with limited availability and few new spaces on the horizon, many are turning to office and retail settings that offer better proximity and increased visibility, according to a JLL report from earlier this year on medical outpatient buildings.
"The outpatient sector is forecasted to grow significantly over the next decade as the aging population requires more frequent and complex care," according to a report last month from Colliers. A Marcus & Millichap report from this year also noted that medical office space demand is predicted to continue to rise long term, though the increasing share of completions are taking place in just three states: Texas, Florida and California.
The future spaces at the Wisconsin Circle property build off other medical leasing at the property, said Jason Winans, the executive vice president of asset management with Chevy Chase Land, in a statement. They include deals with a dental practice and expansions for a plastic surgery group and an eye doctor practice.
Chevy Chase Land manages more than 1.6 million square feet of commercial real estate, including office, retail and multifamily properties, according to its website. Properties in its portfolio in and around the District include the roughly 315,000-square-foot 2 Bethesda Metro office building and the 279-unit Barrett at Chevy Chase Lake.
For the record: JLL's Conn Curry, Andy Thau, Alden Stabb and Danny Sheridan represent Chevy Chase Land Co.
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