As with any investment, MOBs offer unique opportunities and considerations. Seasoned in a wide range of real estate transactions, including hospital and physician acquisitions, divestitures, and basic medical and commercial leases. These properties are built to be fully ADA compliant and will typically feature . The 179,000-square-foot portfolio comprising outpatient medical office buildings and surgery centers spans four statesPennsylvania, Connecticut, Georgia and Texas. As such, demand for physical medical office space is expected to remain high in the year to come, especially as the Baby Boomer generation ages and seeks out increasingly specialized health care services. Subscribe to our commercial real estate newsletter. Hybrid work models, sustainability and technology among key trends influencing Saudi commercial real estate, JLL says. Copyright 2022 Colliers International Lee Asher, [], Frisco Medical Pavilion II Receiving Interest from Healthcare Users Across Specialties (FEB. 23, 2023 DALLAS) Caddis Partners hosted a groundbreaking to commemorate Frisco Medical Pavilion II. According to Emerging Trends in Real Estate 2022, there will be new opportunities in both urban and suburban markets, with Sun Belt metropolitan areas like Austin, Miami, and Phoenix leading the way. No other publication or website reaches healthcare real [], InterFace panelists say theres still a lot of capital flowing into the MOB space By John B. Mugford What a difference a year can make. Facebook Linkedin Twitter Youtube Instagram TikTok. Banking services are provided by Blue Ridge Bank, Member FDIC. Download this whitepaper to learn which top retail CRE brands are poised for big things in 2023. 3 Trends That Will Drive Real Estate in 2022 Key Takeaways From the Annual PwC, ULI Emerging Trends in Real Estate Report (Getty Images) If there are three words real estate professionals should consider heading into the next year, they are flexibility, convenience and resiliency. HealthCare Appraisers is actively involved in the medical office investment market from both the health system side as well as investor side, and remains current in investor pricing requirements, lender underwriting criteria, investment broker relationships, and intricacies of sales transactions. Our dedicated Investor Relations Team is standing by to help simplify your real estate investing process. To put these costs in perspective, medical office buildings cost an average of $498 per square foot to build compared to distribution centers ($214/SF), strip malls ($245/SF), and traditional suburban office ($313/SF). Trends over several years show the medical office building (MOB) market appears to have survived 2020 pretty well, and these statistics are evidence of that sectors strength, particularly compared to the office market. The COVID-19 initiative has influenced the drive for more telehealth consultations and increased the focus on technology for . This shows that despite economic swings, medical office rents are reliable. The year ahead looks positive, with retail and multifamily asset classes rebounding and industrial continuing to thrive. Prospective investors will want to ensure that their projects will deliver at least the same quality if they expect to receive the same rental rates. Estimated targets do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In the medical office space, competition is not inherently harmful. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. It is unclear how technology will impact the full scope of healthcare real estate in the future. There are also benefits associated with being located farther from the hospital campus. If there is one thing we can take away from 2020, it is that healthcare must be delivered physically and virtually. According to the U.S. Bureau of Labor Statistics, employment in healthcare occupations is expected to grow 16% between 2020 and 2030, much faster than the average for all occupations, adding about 2.6 million new jobs. JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Revista (a medical property research platform) showed average asking net rates around $21.40/SF at the same time. The REITs wellness infrastructure portfolio includes seniors housing, skilled nursing facilities, hospitals and medical office buildings. MOB facilities located in retail environments are also attractive to patients and staff. Another source reveals that in the third quarter of 2021, the Boston-Cambridge area increased to 42 million square feet of lab inventory. J.P. Morgans website and/or mobile terms, privacy and security policies dont apply to the site or app you're about to visit. Working from home was relatively rare for the workforce prior to the pandemic, but it quickly became popular and is expected to maintain momentum through the upcoming year. Although there were some surprises and overly negative forecasts surrounding retail and office commercial real estate markets, industrial continues to perform well. Sign up for the WM Morning Memo newsletter. In 2020 and 2021, we released an overview of upcoming healthcare real estate trends. Given the rapidly changing macro environment, estimates may not reflect . As investors plan for 2022, Meridian CEO John Pollock is predicting three trends will drive activity healthcare real estate. Number 8860726. Or to subscribe to the monthly HREI magazine for even more comprehensive news and analysis, please click here. The 2022 Outpatient Real Estate Development Report provides a wealth of information on medical office and other outpatient properties started and completed in 2021 by 3rd party developers. Yet not all patients can or want to travel to a hospital campus for care. This website does not constitute an offer to sell or buy any securities or other investments. One well-known trend that was already underway long before the pandemic is the rising proportion of patient care delivered in outpatient facilities. Moreover, in Q4 2020, the average price per square foot of medical office transactions was 3.7% higher than in Q4 2019, which proves that medical office is resilient even in the wake of widespread economic turmoil. MOB space under construction as a share of inventory is highest in Atlanta at 6.1%, followed by Miami at 5.9% and Washington, DC at 5.2%. Medical professionals seeking assistance in buying, selling, or leasing healthcare real estate can trust our team to serve them to the best of our ability. 2023 Alliance Consolidated Group of Companies LLC | All rights reserved | Privacy Policy, Medical Office Buildings: What You Need To Know, Medical office real estate was once considered so highly specialized that few individual investors wanted to add it to their portfolios. But other advancements may begin to require new types of healthcare commercial real estate (CRE) spaces. Several factors are driving this growth in demand for MOBs. That is a slightly higher percentage than it has been over the last decade. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Collectively, our team has decades of experience, allowing us to provide our clients with the very best in advisor knowledge and expertise. Yet, these 10 retail brands prove there are many untapped opportunities in the year ahead. Medical office space is as diverse as the healthcare industry itself. The sectors resiliency, as well as strong underlying fundamentals, has increased investor appetite for healthcare-related real estate. Abby is a recent graduate of Quinnipiac University with a BA in Political Science. Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business. In Boston, a market known as one of the strongest in the life sciences segment, laboratory vacancy rates are about 1.7%. The data supports findings from the Saudi office sector in 2022. Posted BY: Jordan Conradson "#ArrestKatieHobbs" is trending on Twitter following bombshell allegations made last week about a phony mortgage and real estate transaction scam used by the Sinaloa Cartel to bribe elected officials and control the state of Arizona. For example, the Internet of Things (IoT) medical devices segment could reach $9.4 billion by 2026. However, increasingly, there is demand for medical offices located in more suburban and rural areas as patients seek care closer to home. Demand remains high and the tenant base is stable, leading to healthy interest from real estate investors. We are incredibly proud of the success the business experienced this year a feat [], Posted in Breaking News, Companies & People, FOR IMMEDIATE RELEASE Chicago, IL (February 20, 2023) RX Health and Science Trust (RXHST), an internally managed, real estate investment trust (REIT) focused on the acquisition and development of medical office facilities across the U.S., announced today the acquisition of Union Park in the Atlanta, GA MSA. Overall, the future of multifamily looks bright, with a couple notable exceptions. Ideally, a medical office building will be located in an area that already receives significant car and foot traffic. Revista notes that rents are steadily increasing by 2-3% per year. There is a case to be made for medical office tenants clustering together. Our portfolio includes medical, retail, industrial and office properties. The rise of telehealth initially created some concern that physicians would exit the medical office space instead of greater telehealth accessibility, but that has not proven the case. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors portfolios. Abby is responsible for the development of prospective investor relationships, communication and being investors first point of contact at EquityMultiple. Fort Lee, New Jersey, United States. Nationally, there was 15.3 million square feet of net absorption in 2020 with just 13.7 million square feet of space delivered. But prior to that, there was a gap. Related: Draw the Right Lessons to Win Long Term. As yields for traditional real estate asset classes compress, we expect to see more investors institutional and retail investors alike pour capital into the medical office sector in search of higher yield and a relatively safe investment alternative. HealthCare Appraisers is pleased to present its 2022 Medical Office Fundamentals Outlook, which is the product of discussions with numerous lenders, real estate brokers, investment bankers, and various other medical office entities, on subjects such as industry drivers, financial markets, capitalization rates, internal rates of return, as well as current trends and overall market conditions. At the very least, technology will continue to be vital to healthcare in 2022 and continue to grow and evolve. realvantage.co - RealVantage . The deadline in March 31, 2023. ABSORPTION outpaced new development completions by mid-year 2020. 2014 - 2016. Staff, who might otherwise be confined to an isolated office park, will be drawn to the convenience that retail environments offer as they can more easily pop out for lunch or to run errands on their breaks. Moreover, rents are now on the rise. Associate Ron Ott provided transactional support. Traditionally, they have been located on or near hospital campuses, given the referral patterns between physicians and affiliated hospitals. The rents that other MOB landlords receive should be put in the context of their building and tenant quality, including but not limited to the age of the building and the extent of the tenant fit-outs. Any financial targets or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. According to Stifel healthcare investment banking leaders, healthcare spending is currently about 18.5% of the GDP. Given growing demand for medical office space and a lack of new construction, many real estate developers are starting to convert traditional office space into medical office. Subscribe to our commercial real estate newsletter. Investing in securities or real property investments (the ""Investments"") listed on EquityMultiple pose risks, including but not limited to market risk, credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Medical office real estate was once considered so highly specialized that few individual investors wanted to add it to their portfolios. Over the last six to eight years, medical office rents have stayed pretty much within a $4.00/SF range. If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Despite suffering setbacks during the pandemic in 2020 and 2021, the commercial real estate industry has a positive outlook heading into 2022. Economic growth and a healthy labor market are key drivers for a sustainable medical office market. All Rights Reserved. There are different space requirements for diagnostic imaging facilities, for example, where x-rays need to be conducted in lead-lined walls. According to a survey of medical office landlords, collection rates averaged 95% even during the depths of the pandemic. She specializes in the marketing and sale of hospitals, surgical centers and healthcare properties including office, retail, industrial buildings and land. Terms of Use Finally, 2021 has arrived! It does not summarize or compile all the applicable information. According to a survey of medical office landlords, collection rates averaged 95% even during the depths of the pandemic. Moving forward, its not unthinkable to have medical providers give patients pagers like they would get at a restaurant, which would allow patients to go run errands or do other shopping on-site while remaining close by. Therefore, MOB developers tend to be highly disciplined and do not build on spec; instead, they work to create an ecosystem of healthcare tenants that compliment one another (e.g., dentists, physicians, physical therapists and other specialty care providers). Commercial, Residential, Industrial, Retail, Office. Articles or information from third-party media outside of this domain may discuss EquityMultiple or relate to information contained herein, but EquityMultiple does not approve and is not responsible for such content. Healthcare real estate is continuously adapting to demand and the market at large. First, expect more outpatient sectors. A once in a lifetime bull market for advice. Trends that Shaped the Real Estate Market in 2022 are Here to Stay, with Many Leaving Lasting Impacts . Another way to evaluate MOB competition is by looking at rental rates in the market. Improve your working capital, reduce fraud and minimize the impact of unexpected disruptions with our treasury solutionsfrom digital portals to integrated payables and receivablesall designed to make your operations smoother and more efficient. Construction of new medical office buildings tends to lag the construction of other property types, in large part because these facilities are expensive to build and often require purpose-built facilities. 1,000+ advisors. These properties are built to be fully ADA compliant and will typically feature high-end finishes and aesthetics. Feature Story: Investment outlook: Quick rebound or slow recovery? NEWS PROVIDED BY CIT, a division of First Citizens Bank Feb 21, 2023, 09:23 ET NEW YORK, Feb. 21, 2023 /PRNewswire/ First Citizens Bank today announced that its Healthcare Finance group, part of the CIT division, provided $50.3 million in financing to Montecito Medical Real Estate to recapitalize a portfolio of medical office buildings. There is currently an excellent market for veterinary real estate, and DVMs are finding it lucrative to sell their properties while remaining in the facility and continuing their practice. Opportunity zones are areas designated by the government. The longtime, well-known HRE facility broker who is now the CEO of Denver-based Prescriptive Capital, [], Despite the macro headlines, the REITs execs say this is the Golden Age of Biology By Murray W. Wolf Despite the macro headlines, we remain optimistic and excited for our business as we are in the early innings of the Golden Age of Biology. That was just one of the bullish comments shared Tuesday (Jan. [], Despite challenges, HRE fundamentals remain strong, Revista says By John B. Mugford Perhaps James A. Schmid III, chief investment officer and managing partner with Media, Pa.-based Anchor Health Properties, summed up how many successful healthcare real estate (HRE) investment and development firms are going about their business at a time when costs and interest rates [], In a Q&A, CEO Chip Conk talks about the investment firms thoughts on the market By John B. Mugford Despite a current slowdown in medical office building (MOB) sales due in part to rising interest rates and subsequent increases in the cost of debt, as well as other factors one of the sectors [], 10th annual awards recognize excellence in HRE development and executive leadership MINNEAPOLIS, Jan. 18, 2023HREIis pleased to announce the finalists of the 2022 HREI Insights Awards, the first and only national awards dedicated to recognizing excellence in the areas of healthcare real estate (HRE) development and executive leadership. Historically, Class A medical office buildings have been located on or near hospital campuses though Class A MOB properties can now be found further afield. Leasing activity fell 10.8% in the fourth quarter to 40.7 million s.f. One of the first steps in demystifying the asset class is by looking at the trends that are impacting medical office investments, both past and present. Ownership of medical office buildings can take many forms, ranging from physician-owned properties and those owned by hospital systems to properties owned by much larger real estate investment groups, including real estate investment trusts (REITs) and other institutional investors. About. Asking rates ended at $23.69 per square foot, moving up 3.7 percent compared to the same time last year. Infrastructure investments tend to directly benefit commercial properties located in the area via increased access, higher quality amenities and services, and enhanced desirability for employers and households, Calanog said. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. These reports can be especially telling as they indicate the types of healthcare the local population is most likely to need and will influence the types of tenants a MOB investor tries to attract to a building. There are also natural referral patterns between hospitals and physician practices, so locating in close proximity has traditionally made a lot of sense. According to CoStar, a commercial real estate database, MOB asking rents average around $22.30 per square foot (NNN). This lack of new construction is helping to keep vacancies of existing facilities low and is driving MOB rents to all-time highs. This shows that despite economic swings, medical office rents are reliable. Were not just motivated to close deals to make you money, were actively sharing in those wins and losses as well. However, we should note that labor, inflation, and rising interest rates may present a few challenges. Revenue expectations for 2023 are mixed among those surveyed40% say revenues should increase, 48% see revenues decreasing, and 12% expect no change. Another reason why real estate investors are bullish about medical office is because of its low vacancy rate compared to traditional office. Therefore, their willingness to pay a premium for MOB facilities is ultimately grounded in whether they can still generate a sufficient return on their revenue. According to one source, telehealth usage is 38 times higher than before the pandemic. Alliance invests in commercial real estate across the US. The 2022 Medical Office Fundamentals Outlook explores and illustrates timely real estate-related topics for medical office buildings, including rental rates, development trends, preferred product type, COVID-19 impacts, and pricing parameters. These recapitalizations are often the start, or the seeding, of new [], Posted in Companies & People, Transactions, Headwinds are likely to slow activity, but the need for projects will remain strong By John B. Mugford With so many economic headwinds facing almost all business sectors, even the recession-resistant healthcare real estate (HRE) sector, why is a group of development professionals involved in the HRE space remaining so optimistic? The BGL Medical Office Market Update is a quarterly research publication highlighting national medical office building transactions and industry trends within the medical office building real estate market. Discover the latest numbers, news and market moves to know about each week with Ginger Chambless, Commercial Bankings Head of Research. Currently, telehealth appointments require offices or flex spaces with appropriate technologies for physicians to virtually meet with their patients. 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