Independent physician groups continue to monetize their real estate assets, reliably selling $1B+ in assets annually. As competition remains fierce for deals in the sector, this segment continues to be a source of opportunity for investors.
After finishing out 2020 with one of the strongest volume quarters in recent years, 2021 is off to a quiet start. $1.8B in MOB transactions closed in the first quarter, down from $3.3B in 1Q20 and in line with 1Q19. On a TTM basis, we are now running at just $10B in volume.
Occupancy has remained stable throughout 2020 and into 2021, but quarterly absorption reflects some level of negative impact, although short in duration, in the third quarter of last year. While the average each quarter for absorption in the top 50 markets has been around 3.2 million square feet, in 3Q20 that total fell to just 800K. Interestingly, this impact shows to a greater extent in the largest 10 markets.
Much has been made of private investors controlling the buying landscape in recent years. According to Revista, private investors have increased their share of overall MOB buying activity from 55% in 2019 to 69% in 2020 and 70% YTD in 2021.
Despite all the difficulties of the pandemic in 2020, medical office transaction activity still kept pace with previous years. Total sales volume cleared $11.2B and these top buyers represented almost half (46%) of that total.
Revista has posted a research paper titled “2021 The Off Camus Debate”. The research piece outlines the movement of healthcare towards off campus medical office buildings and provides analysis on an off campus group of MOBs
A lasting conversation among investors in the MOB sector has been the choice between On campus MOB investments and Off campus MOB investments.
In March, when most of the country shut down in order to slow the spread of COVID 19, when one needed to see the doctor, in many cases the only option was through a virtual visit. As of July, Telehealth was still representing 21% of all ambulatory visits. How will this affect physician and health system's ambulatory space needs? We asked in our October survey, and here is how you answered.
Phoenix is an investor favorite for sure. While nationwide roughly 65% of medical office space is user owned, in Phoenix only 30% is user owned. A significant driver of this is how incredibly fast Phoenix is growing.
One of the drivers of the slowdown in activity is the volume of mortgage financing. Revista tracks recorded mortgage financing for the almost 50,000 medical office buildings in its database.