Insights

Our expertly crafted investment strategies transform healthcare real estate opportunities into profitable ventures.

Why Healthcare Real Estate

Medical Office – Using Jobs

  • Healthcare employment increased by 650,000 jobs in 2023 with accelerated growth throughout 2024.
  • Medical office using jobs grew by 170,000 or 3.8% year over year

Lack of New Development

  • Since 2020, construction starts for MOBs remain below average
  • Supply continues to increase pushing occupancy to historic highs

Fundamentals

Vacancy vs Asking Rent

  • Occupancy is hovering around historical highs at 92% nationwide
  • Annual asking rents are up 3.2% year over year

Historically Low Activity Sales to Reversion

  • Sales volume is off 40% from historical 2022 highs
  • As interest rates have risen, so have cap rates trending to 7% on average, over 100 bps higher from 2022

Healthcare Real Estate Sector

Demand

  • Large and growing aging baby-boom population, living longer lives. People over 65-years-old visit the doctor 2.5 times more than the rest of the population.
  • Healthcare spending projected to grow 5.5% annually to $6 trillion by 2027

Supply

  • Healthcare real estate market is large and fragmented, worth a combined $1 Trillion, including senior living
  • 63% of healthcare real estate is still owned by hospitals, providers, or the government
  • Hospitals and providers continue to sell their real estate to re-invest in their core business

Construction Trends

  • MOB construction has fallen from 21-23 million square feet annually to 17.7 million square feet in 2023
  • Construction costs are up 40% over the last 3 years, driving new rents significantly higher
  • MOB construction starts have remained stable, but the pandemic has prolonged delivery timelines

Occupancy Trends

  • MOBs stable long-term occupancy rates around 90% over the past decade; hit 92.3% in Q223
  • The drop in deliveries, as noted above, is projected to result in a reduction of the vacancy rate

Rent Trends

  • Average national gross rents for MOBs grow consistently, now averaging 3% annually
  • With construction costs, increased rent bumps and higher occupancy, rent growth is expected to increase
  • Consolidation in the healthcare industry continues to drive demand for space