A weekly running sum of medical office volume through April 2020 reveals that volume is slowing but that overall, total volume is still running ahead of 2019.
It looks as if the first quarter (1Q) might’ve been the calm before the storm when it comes to MOB sales.
In 2020, things are certainly changing a mile a minute. But let's take a look back to 2019 and the investors who most actively acquired MOBs. Welltower takes the title acquiring $2.2 billion throughout the year, followed by MB Real Estate, Montecito and Anchor Health Properties.
Based on planned projects, a slow down in starts in the beginning of this year was expected. But for those scheduled starts, even into March and April, projects moved forward with few exceptions. Projects scheduled to open, however, have a different story.
verall, the report shows little impact from the Covid-19 pandemic. The chart below shows key aggregate same-store year over year growth rates for key MOB metrics.
At a time when MOB sales have slowed considerably as a result of the COVID-19 pandemic, it was reassuring to see a good-sized transaction take place in recent weeks.
Despite mounting stay-at-home orders and market turbulence throughout the month of March, medical office building sales ended the quarter up from a year ago. Want access to data as it happens? Subscribe to Revista to search building sales as soon as Revista Research enters them in our Transaction Comps tool.
Revista has developed 2 short surveys in response to the Covid-19 pandemic’s impact on your business. One survey is geared towards owners and managers of medical real estate and the other is geared towards investors and those involved in the investing in medical real estate.
Outpatient Starts rose significantly in 2019. See table below but 30.9 MSF was started in 2019 compared to 23.1 MSF in 2018 (an increase of 34%). Developers also gained a higher share of the starts activity in 2019.
A little over a month ago things were business as usual within the world of healthcare real estate. The Revista Medical Real Estate Investment Forum had just wrapped up with healthy growth in attendance and many attendees were speaking of another year ahead of continued growth in transaction volumes.
Through Q3 of 2019, there was some speculation about whether the total MOB sales volume for the year would top the $11 billion threshold for the fifth straight time.
With the onset of the Covid-19 pandemic this will be an important metric to track in 2020 and beyond. Take comfort in the fact that over previous cycles/downturns the rate held up remarkably well, especially when compared to other asset classes.
The big shift that everyone involved in healthcare and healthcare real estate (HRE) has been talking about for years upon years has finally taken place, at least on the real estate side of the equation.
Classic economic theories establish a clear relationship between supply and demand for many goods and services. In real estate circles the theory says that as prices rise, demand (or occupancy) should fall.
Last year 77 medical office projects started that will be over 100,000 square feet when completed. That's quite an uptick over previous years when we averaged less than 50.
The MOB Scene
December 17, 2019 Mike Hargrave
Single Property MOB Cap Rates Creeping Up
Overall, MOB cap rates have continued to remain at lower levels compared to just a few years ago. According to Revista’s 3rd Quarter, 2019 Medical Real Estate Transactions Report, the US MOB average cap rate 6.4% which was down slightly from 6.5% in 3Q18.
If you have seen Revista’s metro trends you may have noticed the Baltimore MOB market is one of the tightest in the country. The MOB occupancy rate has averaged between 93.9% and 94.8% since the 2nd quarter of 2018.
So much of the conversation in the industry right now is about placing medical services out into the community to be more convenient and cost effective for patients. But what is that community going to look like in 10 years? 20 years? Flexibility becomes the name of the game.
Let’s take a look at the Jacksonville market. At 7.7 million square feet (MSF), Jacksonville’s MOB market is the 36th largest market in the US based on total SF.
After a slow start to the year, medical office building (MOB) sales have picked up in the second and third quarters (Q2 and Q3), providing a very strong possibility that the final 2019 volume will top $10 billion for the fifth straight year.
It doesn’t look as if anyone is going to dethrone Oakland, Calif.-based Kaiser Permanente as the country’s largest owner of medical real estate anytime soon.
For the sixth consecutive year, Kaiser, a health insurer and provider with 8.6 million members in nine states, sat atop the annual “2018 Top 50 Owners of Medical Real Estate” report compiled by Revista, which gathers and provides a wide variety of healthcare real estate (HRE) data, statistics and reports for its subscribing members.
Taken together, the Hospital and MOB sector is valued at $1 Trillion
There are currently about 600 medical office projects under way across the country. More than 15 percent of those projects include orthopedics. Why do so many projects include this specialty?
Revista is thrilled to announce that Andrew Haslam, Chief Asset Officer for Providence St. Joseph’s Health System and Tom Errath, Director for Harrison Street Real Estate Capital will co-chair the 2020 Revista Medical Real Estate Investment Forum.
The country’s healthcare-focused REITs have always been, and are likely to continue to be, an important investor group in the medical office building (MOB) acquisitions sector.
While MOB transaction activity might have cooled somewhat and MOB construction remains steady, deliveries of hospital projects have been on a spike. Based on projects that have either opened or are scheduled to open by the end of the year, we will be adding roughly 35 million square feet to inventory in 2019.
There’s plenty of talk in the medical office building (MOB) sales sector that even though demand remains as high as ever for the product type, the volume has been quiet so far in 2019. Second quarter (Q2) and year-to-date MOB sales statistics compiled by healthcare real estate (HRE) data firm Revista, which provides a variety of HRE data to subscribers, confirm this notion.
Overall, there are 26,545 medical properties in the top 50 metro areas. Of this, we count 1,895 hospitals, 15,116 medical office buildings
Overall, healthcare REITs had total returns of over 33% in 2014 and had an equity market cap approaching $100 Billion by the end of the year
North Shore LIJ Health System of Great Neck, NY teamed up with Waterstone Development Group to purchase 600 Community Drive in Manhasset, NY
Five construction projects scheduled to be completed this spring represent nearly $1.3 billion dollars and more than 1.6 million square feet