October 14, 2015
Mike Hargrave

Investor Appetites for Medical Real Estate Trending at High Levels

Anyone involved in medical real estate in the past few years has felt the trends. Generally, we have seen rising volumes, cap rate compression and rising prices in the form of price per square foot for medical office buildings, hospitals and other forms of medical real estate. Recently, however, we have seen healthcare REIT share prices dip below NAVs, general agreement that interest rates will begin to rise soon, and talk of a commercial real estate bubble forming for some asset classes. One big question on investors’ minds now is: Are we seeing any signs of these recent events impacting the medical real estate investment environment? The answer is not yet. The volume graph below shows all hospital and medical office transaction volume for 2014 and YTD 2015. You can see that volumes through the first three quarters of 2015 are significantly up from the first 3 quarters of 2014. Overall, the first 3 quarters of 2015 has seen $9.5 billion of medical real estate change hands. This is up from the first 3 quarters of 2014 when $5.3 Billion of medical real estate transacted. MOBs have seen quarterly volume decline each quarter subsequent to 4Q14. It will be interesting to see if the fourth quarter of 2015 brings anything similar to the 4th quarter of 2014 when $3.7 billion of MOBs traded. Stay tuned….

Medical Real Estate Transaction Volume; Source Revista

Medical Real Estate Volume Trend