Healthcare and Real Estate Continue to Intersect

Healthcare and real estate continue to intersect as both a growing sector of the economy and an attractive investment opportunity. Demand for healthcare property is driven by aging baby boomers who will inherently require more medical care than younger generations, as well as legislative changes.

The industry is also facing a long-term shift in the way hospitals and health systems deploy their workforces, requiring a significant change to the size of their real estate portfolios. As such, it’s critical that hospital and health system leaders devote the same strategic focus and analytical rigor to their real estate portfolios as they do to the rest of their operations.

Steady Returns in Healthcare Despite Transactions Slowdown
Like other commercial real estate sectors, healthcare transactions have slowed during the COVID-19 pandemic. However, the fundamentals of this asset class are still strong and outperform other core sector assets, particularly professional office space. Medical office occupancy rates and rental rate growth remain solidly on a years-long upward trend.

This strong performance has drawn new investor interest to the healthcare space, even among investors who have traditionally focused on other property types. An increasing number of hospital, health systems and medical practitioners are embracing third party ownership and management of their real estate by partnering with private developers to build new space on their behalf. This is a more cost-effective and efficient way for them to use their capital for the core mission of helping people, while leaving building regulation and maintenance minutiae to the experts. healthcare and real estate