SCOTTSDALE, AZ—As the healthcare real estate sector navigates through economic headwinds and political uncertainties, industry leaders gathered at GlobeSt.com’s healthcare conference here to discuss the current landscape and future prospects. The consensus among experts points to a resilient market with steady growth, despite challenges such as interest rate volatility and inflationary pressures.

Election Impact and Economic Outlook

The upcoming election appears to have minimal impact on the healthcare real estate sector, according to Jon Buehner, Senior Vice President at Capital One. "I don't think the election will have a major impact to us day to day on the finance side for the healthcare side,” he said. “Steady as she goes."

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However, economic factors continue to shape the industry's trajectory. Steven Reedy, Managing Director at First Citizens Bank, noted, "Inflation continues to be real and I don't see a bigger reduction quickly." This sentiment was echoed by other panelists, who expect a slower decline in interest rates than initially anticipated.

Roman Kupchynsky, Managing Principal at MedProperties Realty Advisors, LLC, offered a silver lining: "From our perspective, we are ok with it. We have capital to deploy. We have lenders who will lend to us at a decent rate. It is good for us and we have been able to acquire some properties at a way better cap rate than we might have been able to previously."

Financing Climate and Investment Activity

The financing landscape for healthcare real estate remains robust. Buehner expressed optimism, saying, "I am optimistic on lending and it is improving and will continue to do so in 2025." Reedy added, "We are focused and dedicated on serving this market. We are employing capital in a very consistent manner and I don't see anything changing there."

Christopher Flouhouse, EVP & Chief Investment Officer at Sila Realty Trust, Inc., revealed that his company is "borrowing around 6%" and is "looking to build our pipeline in 2025, 2026 and beyond."

Market Trends and Buyer Profiles

The panel highlighted several key trends shaping the healthcare real estate market:

  1. Outpatient services growth: Bryan Johnson, Americas Healthcare Leader at CBRE, noted, "The great side for medical office is that they are pushing things to the outpatient. If you look at orthopedics, you are doing whole shoulder, whole knee etc. in the outpatient setting, which is great for medical office."
  2. Health system monetization: Johnson also observed, "Coast to coast, we are seeing health systems sitting back and having conversations. Should they be holding these assets? They are asking questions if it is where they should be putting their capital."
  3. Buyer diversity: Buehner stated, "Private buyers have been the main buyers for 2024. Institutional is also looking." Kupchynsky added, "Big family offices have also gotten interested in the space and very active. And return expectations are reasonable because they are long-term holders and will hold for generations."

Challenges and Opportunities

While the sector remains resilient, challenges persist. Flouhouse commented, "If rates do hold at a higher level for longer and perhaps there is a seller that has a capital structure issue, we see that as an opportunity for us. You can see more incremental activity. There isn't mass distress but there will be activity with some pending debt maturity."

As the healthcare real estate market continues to evolve, industry leaders remain cautiously optimistic about its future. The sector's fundamental strengths, coupled with emerging opportunities, position it for steady growth in the coming years, despite ongoing economic uncertainties.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.