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| Walter Page |
ATLANTA, GA– With an aging U.S. population and the fate of
President Obama’s healthcare reform law settled, the medical-office sector
faces a promising future, according to experts on the most recent episode of
the “Commercial Real Estate Show” radio program hosted by Michael Bull.
The episode took an enlightening look at the sector and
explored a variety of topics related to medical-office buildings, including vacancy
rates, cap rates, property-management challenges, overall strengths and possible
challenges for the sector.
“To me, it’s a recession-resistant investment,” said Walter
Page, director of research for CoStar Group. “It has had good occupancy
over long periods of time, and consistent occupancy is the number-one driver of
returns. The demand is great in that you have demographics in your favor with
the Baby Boomers aging. Also, you now have the expansion of medical services to
a broader part of the population.”
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| Mark Engstrom |
The national vacancy rate for medical office buildings is
currently 10.9 percent, which is significantly lower than the 12.5 national rate
for the office sector as a whole, Page said.
Occupancy should continue to be a positive for the
healthcare sector in part “because the job numbers that drive medical office
are exceptionally strong,” Page added.
Short-term challenges to the sector’s performance include
the so-called “fiscal cliff” and potential cuts in Medicare spending, according
to Page. An oversupply of buildings may become an issue in certain markets as
well, he added.
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| Paul Zeman |
The U.S. Supreme Court’s recent decision to uphold the
federal Affordable Care Act has strengthened the medical-office sector, said Mark
Engstrom, executive vice president of acquisitions for Healthcare Trust of
America. “Health-care systems are starting to make decisions, to take on
additional space for their growth,” Engstrom said. “We see the same thing with
physicians: they’re now more willing to sign longer-term leases because the
[law] is here to stay.”
Paul Zeman, a partner with Bull Realty who oversees
the firm’s Healthcare Real Estate Services Group, said investment sales of
medical office properties are increasing. Approximately $5 billion of
healthcare property sales will take place in 2012, and that figure should rise
by 10 percent next year.
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| Michael Bull |
A surge in sales could take place in the fourth quarter of
this year, as investors seek to complete transactions before potentially less
favorable tax laws are implemented in 2013, Zeman added.
“I still love the sector,” Zeman said. “I’m a firm believer
that it’s one of the strongest sectors in commercial real estate.”
The entire episode on the healthcare industry and medical
real estate is available for download at www.CREshow.com.
The next “Commercial Real Estate Show” will be available on
Dec. 20th and will explore how to increase business relationships using
LinkedIn.
For More Information, Contact
Stephen Ursery
The Wilbert Group
404.965.5026
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