Here's Why You Should Have Your Eye on Medical Office Space

January 23, 2020NAI Global News Funnel |  Original Article


Across the nation, medical office space has continued to shine in the spotlight, with the sector seeing strong investment sales and large hospitals continuing to acquire private practices. What’s more, off-campus satellite patient facilities are growing, making medical office space more attractive than ever. 

As health care costs continue to rise, today’s health care providers are looking to become more efficient in providing care, without compromising the patient experience or level of care. As a result, we are seeing more and more consolidation and acquisition of smaller practices, as larger organizations are actively seeking out assets that can serve their patients as outpatient facilities, allowing for care that is not only faster and more easily accessible, but also more efficient and streamlined. 

What does that mean for you? In short, today’s medical market offers tremendous opportunities for commercial real estate developers, leasing agents, property managers, investors, brokers and more — and informed investors are translating these industry trends into successful business transactions. 

With this in mind, let’s take a look at some of the reasons you should keep your eye on medical office space. 

An aging population

It’s no secret that the US population is aging at a rapid rate. In fact, recent reports have estimated that the number of Americans 65+ will nearly double over the next 30 years, rising from 48 million to close to 88 million by 2050. What’s more, the number of consumers who are 80+ is on pace to triple, with the number of those 90+ likely to quadruple in the same period of time, as healthcare continues to improve and people are living longer. 

With this rise in aging patients comes a rise in the demand for healthcare — and also medical office space.

The rise in outpatient healthcare 

Off-campus medical space, or locations away from main hospital campuses, have made up the largest portion of new medical office building construction in recent years. What’s driving this trend? We are seeing a strategic shift toward delivering locations closer to where patients live and work, including patients who were previously underserved. This expansion into the previously underserved territory is helping drive demand for MOBs and other medical office space. 

Additionally, as older patients are more likely to seek out their healthcare from an outpatient facility close to home, and the population continues to age (see previous point), this demand is predicted to continue its growth. Keep in mind, too, that this trend doesn’t apply only to seniors — all patients are beginning to move away from the idea that they need to go to the hospital for everything. 

It is predicted that medical office space will continue to remain an active market that commercial real estate professionals should not overlook. As outpatient facilities and regional medical centers continue to grow, the medical office space market will continue to offer strong opportunities. 

The demand for medical space is directly tied to patients’ need for care and generally remains strong, regardless of other ups and downs or cycles in the economy. Given its low volatility and strong ROI, medical office space is poised to remain a strong product offering in any commercial real estate portfolio.