IRVINE, CA—Publicly traded US healthcare REITs ranked third behind retail and specialty REITs in 2014, and sales of medical-office buildings continue to rise exponentially, Newmark Grubb Knight Frank's executive managing director, global healthcare services, Garth Hogan tells GlobeSt.com. Following the release of the firm's healthcare real estate survey, which was released at the recent BOMA MOB & Healthcare Facilities Conference in Cleveland, we spoke with Hogan about the report's major takeaways and the trends he is seeing in healthcare real estate.
GlobeSt.com: What was the most interest takeaway for you form the healthcare report?
Hogan: Investment activity by the healthcare investment community.
GlobeSt.com: What new trends in healthcare real estate are you noticing?
Hogan: An increase in hospitals monetizing their non-core real estate assets to free up capital and eliminate compliance risks. Also, access to low costs of capital combined with an increasingly constrained supply of quality medical-office assets has increased competition for healthcare investors, decreasing cap rates. We also saw a lot of REIT consolidation in 2014.
GlobeSt.com: How do the capital markets view the healthcare sector?
Hogan: Most non-healthcare investors consider the healthcare sector a niche commercial real estate market. However, the publicly traded US healthcare REITs ranked third behind retail REITs and specialty REITs, raising $10.11 billion in capital for 2014, a 9% year-over-year increase from $9.28 billion raised in 2013, according to SNL Financial. The year also closed with more than $9.5 billion in total medical-office-building sales in the US—a 28% year-over-year increase, according to Real Capital Analytics.
GlobeSt.com: How are tenants in this sector changing due to healthcare reform and the way the industry is shifting away from treatment in acute-care facilities?
Hogan: Practice consolidation and improved healthcare efficiencies are requiring larger medical-office floor plans.
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