Market Watch: Medical Office Real Estate May Be the Next Big Trend

In recent years, medical office real estate has experienced exponential growth. Are you allocating your real estate marketing dollars accordingly? Broad and encompassing, this segment includes everything from hospital and primary care facilities, to psychiatric/counseling offices, chiropractic, acupuncture and massage space.

What’s Driving the Trend?
Supply and demand: Demand for services from the aging Baby Boomer population, coupled with their retirement. Doubling in size from 2015 to 2055, those over 65 will comprise nearly 23% of total population according to U.S. Census Bureau estimates. This has put medical office space in the spotlight, for investment buyers and practitioners alike, for the foreseeable future.

The Heartbeat of the Future
The future of this market, though positive, may experience some dips and dives in response to changing legislature such as the Affordable Care Act, and others, leading to unpredictability in certain markets. Investment in medical office space rose from sub-$4-billion in 2010 to $10.2-billion in 2016, and on-the-whole this sector is expected to continue its climb.

Taking Stock
To what location should your real estate marketing endeavors hone-in on? Generally, medical office space is found either on-campus, in busy, populous areas such as a large hospital or health complexes offering in- and out-patient services; or in medical office spaces in community settings, such as clinics/outpatient facilities situated for more convenient patient access. Some of these even blur the line between clinical/retail space. (Think: Drugstore health clinics.)

Big Picture
Healthcare providers are trustworthy tenants and a safe investment. However there are some shifts, with larger medical practices swallowing up smaller one-and-two person offices, and leading to the need for larger, flexible spaces to meet this demand. As providers scramble to cut-costs and retain customers, those facilities in less-costly, patient proximal locales suited to accommodate cutting-edge, money-saving technology will rise to the top.

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