SCOTTSDALE, AZ-Never mind, well not completely, the various challenges besetting the medical office market. The sector is rich in opportunity, and a broad range of investors and capital sources are oiling their pistols in hopes of making a killing in the market. That at least was the final word at Wednesday’s RealShare Medical Office conference, which took place here. More than 300 people attended the event, which was produced by the RealShare Conference Series, part of ALM’s Real Estate Media Group.
In a fast-paced “Fact or Fiction” segment, Jim Moloney of Cain Bros. and Danny Prosky of Grubb & Ellis Healthcare REIT II confirmed or put the lie to various statements about the market. Both agreed that the market is not the sole playing ground of the large public REITs.
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There are real and “growing opportunities for smaller companies,” Moloney stated, companies that can be “more nimble and creative.”
For his part, Prosky noted that the sector will remain as attractive as it did five years ago. “We can debate the impact of decreased reimbursements,” he said, but that won’t change the aging demographics of our population.
In “Sourcing Capital” the players came into even sharper focus: “Hospital Systems are holding onto their assets,” stated PJ Camp of Hammond Hanlon Camp. “So product today is coming from developers and REITs.”
And While Al Pontius of Thought Leader Marcus & Millichap agreed, he noted that there is plenty of activity from smaller players: “Some 85% of trades are below $10 million, and 80% of the time, the seller is private. This is not just a REIT business.”
The lenders as well paint a pretty broad picture, and players in this space include life companies, local credit unions and even local banks, according to Brian Howard of Stage Equity. “The life companies particularly go after the long-term leases. They’re hitting core assets in core markets.”
In terms of the status of CMBS, Brian Jenkins of Savills said that they “were a player until they weren’t,” and the panel to a person agreed that the jury is still out on their degree of participation in the near term.