Issue link: http://viewer.e-digitaledition.com/i/792660
Strong Market for Medical Office Investment A N E V O LV I N G H E A LT H C A R E landscape is fueling an expanded patient base and strengthening the outlook for investment in medical offi ce buildings, according to real estate crowdfunding fi rm CrowdStreet. Aging baby boomers and the ACA have contributed to larger numbers of patients, who are likely to need more extensive health- care services. Americans ages 51–69 number approximately 75 million, the Pew Research Center notes, and the U.S. Health and Human Services Department says 20 million people have insurance because of the ACA. Portland, Oregon-based CrowdStreet points to estimates that U.S. spending on health care could nearly double between 2014 and 2024, from $3 trillion to $5.5 trillion. "From an investor's perspective, medical offi ce buildings ... are an attractive niche that is outperforming the broader offi ce market," the fi rm says on its website. During one recent quarter, medical offi ce vacancy rates were 9.5 percent, compared with 12.7 percent for other offi ce space. ■ — By Steve Barrett Growth in Medical Real Estate Construction C ON S T RUC T ION OR E X PA N SION of medi- cal offi ce buildings and hospitals across the United States grew substantially from 2015 to 2016, according to Revista, an Annapolis, Maryland-based fi rm that gathers healthcare real estate data. Medical real estate construction in the pipeline as of late 2016 was valued at slightly greater than $102 billion. That is a 5.1 percent increase from the approximately $97 billion fi gure from late 2015, Revista notes. Included in the 2016 fi gure are medical offi ce building and hospital projects that: + Are in late planning stages or already in progress + Represent an expansion of a minimum 7,500 square feet + Are valued at more than $5 million Revista reported that hospital construction in the pipeline was valued at $81.8 billion, compared with roughly $20.3 billion in medi- cal offi ce building projects. Median square footage per project for hospitals was 60,000. The fi gure was 45,000 square feet for medical offi ce buildings. ■ — By Steve Barrett The Right Medicine for Ailing Malls? M A N Y C I T I E S S E E K to repurpose space in partially vacant shopping malls. Increasingly, medical offi ces are fi lling those gaps. Denver-based kidney care company DaVita Healthcare Partners is opening as many as 150§ locations annually, largely in retail sites or quasi-retail sites in community centers, Garrick Brown, Vice President of Retail Research for the Americas for real estate services fi rm Cushman & Wakefi eld, told The Philadelphia Inquirer. While medical offi ces transitioning into malls is a newer phenomenon, he expects it to grow. "The big question is if we may start to see entire healthcare campuses moving into struggling malls," he told the newspaper. "This has not happened in large numbers yet, but we do see this as a likely trend ahead." Joe Coradino, CEO for Pennsylvania Real Estate Investment Trust (PREIT), echoes that sentiment. PREIT negotiated leases for medi- cal facilities at some Philadelphia-area malls that it owns. That's a response to consumers' desire for convenience and ready access, Coradino says. ■ — By Steve Barrett 2 2❱❱❱❱❱ B U S I N E S S O F M E D I C I N E