Aging, Health Woes Guarantee Need for Med Centers

Memorial Medical Pavilion will be a 101,744-square-foot class-A medical office building.

HOUSTON—The aging US population, combined with emerging differences in the way generations process healthcare information, have been significant drivers in the nation’s healthcare industry. For 2017, strong demographic trends support the growing industry and remain a force in investment activity, according to the latest Marcus & Millichap medical office report.

Institutional funds and REITs are actively searching for larger deals and portfolios. And, private capital is emerging as a major option in the $5 million to $20 million price tranche and could begin to take a larger share of transactions this year. A rise in crossover capital is also increasing competition for medical office properties as single-tenant retail investors target similar investment opportunities in this segment for higher yields. For-sale inventory is limited as medical office assets are in high demand with cap rates compressing during the past several years, Marcus & Millichap indicates.