While the amount of outpatient facilities started or completed during 2020 fell by about 9.7 percent from the previous year, the number of healthcare real estate projects taking place remains quite healthy
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.
Back in January, Revista reported that medical office building (MOB) sales had “preliminarily” totaled $10.2 billion in 2020.
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.
Even though the professionals involved in MOBs correctly predicted that investor demand would remain strong for the product type during the COVID-19 pandemic, some involved in development expressed concern that construction numbers could fall as healthcare systems and providers would be forced to focus on a surge of patients instead of planning new projects.
Revista has posted the 4Q20 MOB Sector Quarterly Brief. Available for a limited time this report provides an executive level overview of supply, demand and rent fundamentals for the aggregate top 50 metros as well as the top 10 markets ranked by total square feet (SF).
Healthcare Real Estate Insights and Revista have partnered to create the healthcare real estate industry's most comprehensive survey of outpatient medical construction activity. Revista will tabulate summary results which will be publicized and all survey respondents will be provided summary results including a comparison of how your firm compares to the summed results. Healthcare Real Estate Insights and Revista will also publish rankings.
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
In the past, the lion's share of MOB development has been self developed by the hospital system or provider. In fact historically, third party development has only represented around a quarter of medical office square feet started. Since 2019, we've been seeing a shift in this dynamic with more and more projects moving forward with a developer/investor driving the project.