Medical Office Market In Good Health

May 31, 2016

A checkup of the medical office market is revealing good numbers these days: the number of insured Americans is up, the number of aging Americans is up, and the job outlook for the healthcare industry is up. As a result, owners as well as occupiers could be positioned to take advantage of a healthy market and positive financial outcomes.

Overall tenant demand for healthcare real estate is already on the rise. Not only does the Affordable Care Act translate to a higher number of insured Americans, but the number of people ages 65 and older will rise by more than 40 percent over the next ten years. In fact, Census data reveals that population growth among this age group is expected to remain higher than growth rates in younger generations through the next 50 years, with a particularly strong surge during the next 20. What’s more, hiring in healthcare and related industries is predicted to increase by nearly 20 percent to meet these growing demands.

The resurgence of the industry also means that people have grown to expect faster, more convenient access to healthcare services. A more patient-centered model has emerged, and medical options are now available within local communities. Providers are expanding their offerings into retail-like settings, making the most of strong consumer traffic and demographic trends.

To ensure a proper fit between property and practice, major medical providers account for a significant share of leasing decisions. Absorption has increased for properties providing modern amenities, as well as those that are flexible and facilitate collaboration. Conversely, outdated centers or less-adaptable buildings are subject to higher vacancy rates.

While the long-term effect of the healthcare boom is hard to project due to changes in delivery model and industry consolidation, the current market bodes very well for medical office assets. Whether you’re interested in expanding your portfolio or searching for the ideal space to expand a medical practice, the commercial real estate professionals at Intelica can help. Contact us today.