The healthcare real estate landscape is changing fast.
Medical office building (MOB) sales in 2017 set a new annual record for sales volume amidst a market that saw, other than industrial, all other real estate sector sales volumes slide precipitously from 2016.
- Investors are attracted to the secure income streams provided by investment grade credit healthcare system tenants that historically are likely to remain in place longer than non-medical tenants.
- Large private equity funds and REITs are employing a strategy of assembling or buying portfolios of assets with a mix of tenants, lease terms, and locations both on hospital campuses or out in the communities the hospitals serve. Portfolio sales are driving up sales volume and price per square foot, and compressing cap rates down.
- In an era of consolidation and a scramble for market share, healthcare systems are aggregating physician practices and in many cases buying the MOBs in which the practices are located or building new ones from the ground up.
- The projected rate of job growth in healthcare is 2.5 times greater than the national average for all occupations, reports Forbes.