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Research - NOVEMBER 8, 2018

Everest Healthcare Properties: What is fueling medical real estate investments?

by Andrea Zander

The medical office building (MOB) has been the main vehicle for outpatient healthcare delivery in the United States for the past 30 years. The medical industry has transformed itself from predominantly hospital and inpatient care to MOB and outpatient care. In fact, over 70 percent of all healthcare service delivery, including the majority of surgeries, is in an outpatient setting.

Everest Healthcare Properties discusses the drivers and attractive investment attributes of the MOB sector in its What is fueling medical real estate investments white paper.

Medical real estate is characterized by a combination of growth, income, strong returns, and low volatility. Along with macro tailwinds and robust property fundamentals, it is a compelling proposition for institutional investors. The key drivers of medical real estate growth include:

  • Changing demographics
  • The healthcare regulatory environment
  • Technology advancements
  • Medical retailization
  • Transformation of medical service delivery to outpatient
  • Robust real estate supply and demand fundamentals
  • Attractive investment attributes for institutional investors

 

MOBs tend to emphasize patient-centered experiences. Similar to the retail experience, MOBs provide comprehensive medical care, conveniently organized and accessible under one roof.

The following are salient trends for MOBs:

  • MOBs are becoming more complex and integrated.
  • Flexibility of space is essential to the financial success of MOBs.
  • To capture patient load, MOBs are conveniently and strategically located.
  • Smart building MOBs are digital.
  • Sizes of class A and B MOBs generally range from 40,000 square feet to 75,000 square feet, with some as large as 150,000 square feet.
  • Green and aesthetically appealing MOBs are gaining a competitive edge.
  • Most of the MOBs associated with hospitals have become the primary location for education, preventive care, wellness, outpatient procedures, and surgeries.

 

To read the full report, click here.

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