Overall, the medical office market in the Dayton area appears to be maintaining a consistent pattern in terms of new lease deals and renewals. The impact of the Affordable Care Act (ACA) seems to be a factor in all sectors of the market. While there have been a few notable new lease deals this year, the overall market continues to focus more on stability and less on expansion or growth.The renewal market continues to be dominated by the two major hospital networks, Premier Heath Partners and Kettering Medical Center. Most new expansion and growth originates from these two organizations. As a result of the ACA and its pending implementation, the two health networks have begun to curtail spending in preparation for the impact it could have on the local and national market and the nature for the delivery of health care. These concerns have caused the growth and expansion of this market to be temporarily put on hold but the market as whole remains stable.
Notable deals for the year include Southwest Ohio ENT signing a 12 year deal for 21,000 SF of space in the Wright Health Building as well as Kettering Medical Center adding the new Family Practice in the Ledgestone building in Springboro. Also, Premier Health Partners recently opened a new Pediatrics Practice in Claude Thomas office park in Franklin.
The pending Medicaid funding and expansion of the local servicer CareSource could have a positive impact on the market in terms of absorption and even new construction. However, these opportunities are intrinsically tied to both state and national decisions that continue to be discussed, debated and vetted in our respective capital cities. Once made, they should begin to have an impact on our market and hopefully begin to create positive outcomes for tenants and landlords alike.
The medical office market, like the general office market, has been greatly affected by both the local and national markets. The Dayton area has generally recovered more slowly than its surrounding markets in Ohio and the region in general. As a result, developers, landlords, and tenants remain patient for the reality to take hold and a more concrete direction to be established.