One industry that is experiencing significant growth in Arizona is medical. In commercial real estate, medical office building (MOB) demand continues to be strong, which translates to high demand for tenant improvement projects in this sector.

Phoenix experienced record low MOB vacancy at 11.4 percent in 2024 according to a report from Colliers. The Phoenix market also posted 10 consecutive quarters of positive net absorption from 2021–2024. This growth is primarily driven by:
• Demographic shifts
• Healthcare system expansions
• Evolving patient care models

In turn, the growing demand for MOB space is keeping the LaunchPM team busy. While LaunchPM delivers project management solutions to clients and companies in multiple industries, our team has a significant portfolio of project management experience in the healthcare sector. From clinics to surgical centers, LaunchPM has overseen the construction and tenant improvement of MOB offices and facilities throughout the Valley.

MOB project challenges

Construction and tenant improvement projects in the MOB space frequently require outside-the-box thinking. MOB projects entail a mix of variables that must be incorporated into the design and implementation plan. A few factors project managers need to consider include:

• Specialized equipment accommodations, such as power and physical space needed
• Actual installation of equipment and timing in the project schedule
• The placement of equipment, workstations/nurses’ stations and how it impacts workflow

While MOB clients can have an equipment manager, some designate this task to the project manager. LaunchPM often provides this service and understands how to address the unique challenges that it can present. For example, we recently wrapped up a project that required the installation of specialty radiology equipment. To get it done, the storefront wall was opened to move MRI machines and 1.5-ton magnets into the space.

In some instances, the medical equipment may require climate control and other special accommodations. It’s vital that the design and construction incorporate the operational needs, along with equipment requirements such as access to power, water, medical gas etc. It’s also imperative to manage the timeline for the delivery of equipment and furnishings to ensure all is installed and working properly for the first patient day.

MOB projects at LaunchPM

LaunchPM recently completed several MOB tenant improvement projects in Scottsdale for Healthpeak, a real estate investment company that focuses on healthcare properties. Here is a quick recap:

Healthpeak tenant, Wilson MD Aesthetics needed a larger space for its practice. In October 2024, LaunchPM began the full interior gut and redo of two vacant suites, combining them into one large suite totaling 2,837 square feet. The initial TI allowance for the buildout was lower than the full cost of the project based on original pricing estimates. The selection of premium finishes transformed the space and increased the cost of the project. Working closely with the broker paid off. The broker negotiated a new tenant improvement allowance to cover the additional costs. The suite features premium finishes throughout, including wood tambour paneling around the reception area, a custom-arched door to the lobby and wallpapered walls.

Healthpeak and its partner, Breise & Bricon hired LaunchPM to manage the transformation of a large 7,659-square-foot vacant suite into two spec suites and a corridor. The biggest challenge was finding a solution for the multiple flooring transitions and soffits from the corridor to the existing lobby and common restroom areas. To bring everything together, a new hallway was created that matches the corridor on the opposite side of the building. The ceiling grid was changed and parts of the soffit in the lobby and restroom area were refinished to provide a more seamless transition of the space for the two new suites.

The future of MOB

The MOB sector is outperforming traditional office markets, especially in the Phoenix metro and Tucson areas. Development trends include:
1. Expansion projects – Major healthcare players are investing significantly, with Mayo Clinic adding 1.2 million square feet to its North Phoenix campus, costing $1.9 billion
2. Specialized facilities – There’s a growing demand for specialized MOB, such as ambulatory surgery centers and diagnostic imaging facilities, prompting highly-specific and specialized real estate solutions
3. Cost-effective strategies – Tenant improvement and repurposing existing spaces to manage expenses with the installation of modular construction and gray shell buildouts

LaunchPM has been on the front lines in this space for more than a decade, bringing our expertise in project management to the MOB industry. To learn more about LaunchPM, our services and projects, get in touch here.