The Prognosis for Medical Real Estate

February 16, 2015

Investors, it’s time to schedule your check-up. Medical office buildings, including doctor’s offices, urgent care clinics and diagnostic laboratories and imaging centers, continue to see the most gains of any US property sector.

Sales of properties leased by doctors and other health-care providers reached $6.67 billion in 2013, and neared $6 billion again in 2014. This data, collected by Real Capital Analytics, a global provider of commercial property data, indicates a continued interest in the retailization of healthcare.

With patients being viewed as customers and healthcare providers focusing on convenience as well as efficiency, investors may find this an ideal time to capitalize on commercial real estate opportunities.

Revista, a Maryland-based research firm that focuses on the medical real estate industry, has been tracking sales and construction statistics and makes favorable predictions for the year ahead:

Sales will remain steady

Due to strong valuations and capital availability, transaction levels will remain near record highs. Commercial real estate investors can also breathe easy knowing that these properties generate steady income from multiyear leases. Plus, they offer higher investment returns than other types of commercial assets.

Development is on the rise

Baby Boomers are aging and more people are securing insurance under the Patient Protection and Affordable Care Act, forcing the medical industry to focus on accessible outpatient care. As a result, development and investment opportunities will continue to increase.

Consolidation will create demand

Larger medical systems are steadily acquiring hospitals, spurring the hospitals to acquire additional medical practices. The need for efficiency will increase, and tightening vacancies in most markets will add to an environment that bodes well for commercial real estate investors.

Don’t sit in the waiting room while there are medical office space opportunties in the St. Louis area? Contact the experts at Intelica CRE today.