Publications

- September 1, 2014: Vol. 26, Number 8

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Redefining medical office: Technology, new markets and consumer demand are transforming healthcare

by Tom Errath and Dean Egerter

 

Investors have become increasingly interested in the benefits that have been associated with medical office buildings, based on their relative performance to traditional office during the recent economic downturn and capital markets dislocation. Investors have been attracted to the property type’s low tenant turnover, compelling tenant credit profiles and ability to access financing. Given this more competitive investment environment and with recent market and Affordable Care Act changes that affect healthcare and its delivery systems, it is clear that, in addition to traditional medical office buildings, new forms of healthcare delivery real estate warrant institutional investors’ attention.

Healthcare spending constitutes 18 percent of GDP, is growing, and is staring down the largest elderly population in history. To deal with this reality, the providers of health insurance have been focusing on purchasing healthcare more economically; doctor

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