U.S. medical office market fundamentals have been resilient this year.

The U.S. medical office vacancy rate remained at 10.3% through midyear 2019—its lowest level of the expansion—and average asking rents stayed near record levels.

Rent growth fell to 1.8% year-over-year in Q2, down from the five-year average of 2.6% as net absorption has softened since mid-2017.

Top-tier domestic institutional and foreign capital as well as REITs have fueled demand for medical office properties. Although medical office investment volume is down from 2018, pricing remains strong.

Demographic and health-care industry trends are firmly entrenched and forecast to persist, supporting long-term demand for medical office space.