Sometimes the stars align when it comes to investment and development opportunities. That just might be the case for the US healthcare real estate market, which is becoming a major, sought-after business.
Estimates are that 79 million baby boomers are heading toward retirement. As people age, they require more medical services, which translates into the need for more medical space. Add to that the fact that healthcare reform is expected to insure millions of previously uninsured or under-insured individuals. As it stands pre-election, President Obama’s Affordable Care Act would be phased in over the next few years, and some experts predict this alone could spur demand for as much as 60 million square feet of additional healthcare space.
These factors, along with major advances in healthcare technology, are the driving forces behind the need for more technologically advanced medical space. Experts say this will be a combination of medical office buildings, clinics, inpatient facilities, seniors housing and long-term care facilities and outpatient centers, such as ambulatory care, cancer, diagnostic imaging, cardiovascular, dialysis, urgent care and rehabilitation.
Industry reports peg healthcare real estate as a $700-billion to $750-billion market, and it only continues to grow; approximately one-quarter of that market consists of medical office buildings.
Reis Inc. reports that the national office vacancy rate in third-quarter 2012 was 17.1%, whereas market reports indicate that the medical office vacancy rate could drop to 10% by year’s end. Medical real estate has proven a more stable asset class during the recession because physicians, hospitals and practice groups tend to sign very long-term leases. They don’t move around easily due to expensive buildouts and patient bases…
…To read the rest of the story, please visit the October 2012 issue of Real Estate Forum.