But the capital markets dislocation and credit crunch are having a mild impact on this favored sector of real estate, with emphasis for greater returns now shifting to class A properties, according to speakers here last week at BOMA's 2008 Medical Office Building and Healthcare Facilities Conference.

If there's one area of general concern in the sector, many industry executives pointed to class B and C properties, especially those located off-campus.

"There is a valuation adjustment off-campus," said Brent Tharp, senior vice president of medical properties for GE Healthcare Financial Services "What you're seeing off campus is a return to the norm, the statistical norm. There is a 50 to 100 basis-point difference in cap rates compared to one year ago."

Financing is available for class A off-campus assets, pointed out Jeff Piehl, director of Cushman & Wakefield's senior housing/healthcare industry group. He also noted an emerging trend of many developers competing to deliver class A properties off campus, but close to the main hospital.

Piehl said new off-campus construction is mostly A, with class B and C off-campus being trended out. "Class B and C will be a slow to dead market for the rest of the year," he predicted.