Why Choose an Investment in the Healthcare Real Estate Market?
Major shifts in the healthcare industry since the Affordable Care Act (ACA) have created less demand for space in traditional hospitals and greater demand for space in a wide range of other healthcare properties. That, in turn, is driving development and values are staying high due to low interest rates. It’s encouraging that monies are flowing into the healthcare real estate market from private equity firms, foreign investors, real estate investment trusts and others.
Because prices for medical office buildings have risen, investors are looking at other types of healthcare properties that are considered a bit more risky, but offer investment opportunities, such as skilled nursing facilities.
Due to hospitals and healthcare systems being reluctant to sell the massive amounts of properties they own on their campuses, prices are higher for medical office buildings. But as prices rise, hospitals might begin to rethink selling, creating more on-campus property coming into the healthcare real estate market.
New types of healthcare properties are being created as traditional hospitals also face increasing pressure to discharge patients earlier. To address this, some hospitals are developing special facilities for patients who are discharged, but still need medical care.
As a result of the ACA, health systems and doctors are more enabled to confidently make major decisions such as leasing, capital expenditures and other healthcare real estate investments.
With a projection of 35 to 45 million insured patients being added into the marketplace, the demand for health services will be felt by healthcare facilities everywhere. This increase in healthcare demand will create a net positive for hospitals and the owners of on-campus medical office buildings. As the ACA continues to be implemented, the delivery of care is starting to change, and savvy healthcare real estate investors are taking note and stand to benefit.
Office space found in well-located retail centers is catching the eye of the healthcare real estate market. This seems to have some appeal to both physicians and hospital-affiliated practices. Some are taking advantage of smaller spaces, ranging from 10,000 sf to 20,000 sf, that were formerly occupied by banks, video stores, and furniture stores.
Cost–effectiveness together with the abundant parking ratios of many retail facilities can prove an economical decision. Additionally, the access, visibility, and branding opportunities of these retail sites offer healthcare providers a competitive advantage.