The Tampa Bay medical office market has held strong, even as some large physician groups recently closed offices. You might expect vacancy to climb sharply, but the shift is more complex. While Pinellas County saw a drop in occupied space, Pasco County’s booming population fueled solid demand, keeping leasing activity above one million square feet last year. Keep reading to see where medical office space demand is heading next. Check out CoStar’s latest quarterly report on the Tampa medical office market.
The Tampa Bay medical office market continues to show resilience compared to traditional office spaces, despite recent closures by major physician groups causing a temporary softening. Over the past year, medical office vacancy increased by approximately 100 basis points, with Pinellas County experiencing the most significant impact – recording negative absorption of about 155,000 square feet. In contrast, Pasco County, which has seen rapid population growth Tampa Bay, posted positive absorption exceeding 75,000 square feet.
Despite rising vacancy rates, leases in medical offices remain robust across the region. The market recorded over one million square feet of leased medical office space in the past year, representing a nearly 15% increase from the previous four quarters. This marks a substantial jump from pre-pandemic levels, when annual leasing activity averaged around 760,000 square feet between 2015 and 2019.
The competition for market share among major healthcare providers is intensifying, especially along high-growth corridors. There are several corridors, along US-301 and I-75, that have experienced a tremendous amount of population growth over the past several years, and hospital groups have been vying for market share by expanding their presence along these corridors. Groups like TGH, BayCare, AdventHealth, and the wild-card Orlando Health have all been competing for market share.
Medical Office Rents
Medical office rents in Tampa Bay have seen moderate growth, increasing by 2.7% year over year to just over $30 per square foot on a full-service gross basis as of Q3 2025. Pricing varies significantly across submarkets, with prime locations such as Westshore and downtown Tampa commanding rates above $30 per square foot triple-net. New construction commands even higher rates, often exceeding $35 per square foot triple-net or $50 per square foot with operating expenses included.
Office construction Tampa Bay is largely dominated by medical projects, which account for 65% of all office construction currently underway. Most developments are either smaller facilities under 10,000 square feet or backed by major hospital groups competing for regional market share.
The Orlando Health Medical Pavilion, a 120,000-square-foot outpatient facility adjacent to Orlando Health Bayfront Hospital, currently stands as the largest medical office building in development. The first half of the year saw the completion of Onicx Group’s Medical Center at Wiregrass, a 60,000-square-foot facility that was nearly 90% preleased, with Florida Cancer Specialist as the anchor tenant.
Future Outlook and Challenges
While medical office space demand remains strong, the market faces challenges in meeting this need. Quality medical office spaces are becoming increasingly difficult to find as expanding physician groups and hospital systems compete for limited inventory. Financing for new construction has also become more cautious, with lenders typically requiring prelease commitments of 50% to 60% before providing funding.
The future absorption of medical office space is expected to be strongest in high-growth areas such as Pasco County and southeastern Hillsborough County, where population increases continue to drive demand for healthcare services.
The Tampa Bay medical office market demonstrates notable resilience despite temporary setbacks from physician group closures. With leasing activity exceeding pre-pandemic levels and construction focused on meeting healthcare needs in growing communities, the sector remains a bright spot in the region’s commercial real estate landscape.
For investors and healthcare providers, opportunities exist particularly in high-growth corridors where population increases continue to drive demand for medical services. As competition for quality space intensifies, early positioning in these markets may prove advantageous for those looking to capitalize on Tampa Bay’s expanding healthcare needs.