Doctor visits will increase 217.6% faster than the population in Los Angeles, Orange, Riverside, San Bernardino, and San Diego Counties. That’s according to an analysis prepared for the California Hospital, Outpatient Facilities & Medical Office Building Summit in Downtown Los Angeles on December 13.
Quick internet searches would tell you that the hospital sector is closing or shrinking due to growth in the outpatient sector. Revista data, however, paints a different picture of the hospital sector.
Is the speculative MOB market overheating once again? Data from Annapolis, Md.-based research firm Revista indicates that it could be, as the amount of speculative MOB space, or space not affiliated with health systems, has reached a four-year high point when compared to health system-affiliated space.
The medical real estate sector is seeing increasing levels of transaction activity, particularly across hospital real estate and medical office buildings
The Revista mid-year 2017 construction report says to expect 20.9 million square feet (SF) of MOB deliveries in 2018, which would be a rise of 10% over 2016’s 19.0 MSF delivered. And overall, 64% of the MOB expected deliveries in 2018 are expected to be off campus. That is up from 54% observed in 2014.
Well, the time certainly seems right to sell in 2017, as capitalization (cap) rates – the estimated first-year return on an investment – have reached all-time lows. Many high-quality portfolios and single MOBs with credit-rated tenants are trading at cap rates of 6 percent and below, some right around or even under 5 percent.