In the first quarter of 2016, there were 163 transactions of medical office buildings totaling more than $1.8 billion in volume, according to estimates by CBRE, the nation’s largest real estate services provider, in its latest “National Healthcare Real Estate Investor Update.”
By far the largest transaction occurred last January, when a joint venture between Chicago-based Heitman Capital and Denver-based NexCare Group paid $199 million to acquire the 227,628-sf First Hill Medical Pavilion in Seattle.
That facility, which last year underwent an extensive renovation and 63,000-sf addition, is positioned adjacent to the Swedish Medical Center campus that’s part of Providence Health & Services healthcare system, which leases 65% of First Hill. (The architect of the reno and expansion was CollinsWoerman; the GC was Lease Crutcher Lewis.)
CBRE observes that the healthcare section continues to be “one of the strongest job generators in the American economy.” Quoting Bureau of Labor Statistics data, CBRE notes that between April 2015 and April 2016, healthcare produced 482,000 jobs, or roughly 18% of the 2.7 million nonfarm jobs formed in the U.S. during that period.
Last year, the number of uninsured Americans stood at 9.1% of the total population, the first time in the country’s history that number had fallen below 10%. Last year’s future compares to 16% in 2010, the year the Affordable Care Act was enacted.
CBRE also points to a recent Accenture study of six years of hospital margin data and patient satisfaction scores. Top-ranking hospitals achieved markets that, on average, were 50% higher than those with average scores. The top hospitals’ revenue growth also outpaced their operating expenses.
The healthcare sector could become even more attractive to certain investors after new regulations went into effect in April that mandate greater transparency and disclosure for non-traded REITs in such areas as per-share valuation and dividend distribution.
The new regs prohibit the public offering of securities of a REIT or direct participation program unless the sponsor agrees to annually disclose (at a minimum) the per-share value of each security.
“Investors of non-traded healthcare REITs now stand to benefit from these regulations aimed at fundamentally revising this investment product that has long been characterized with nontransparent share prices and high commissions,” CBRE writes. “Healthcare real estate is still very much in demand and will continue to attract broker-dealers to offer the non-traded REIT products. The existing sponsors in the market are expected to continue to thrive while making it more difficult for new sponsors to enter the space.”
Â
Related Stories
Healthcare Facilities | Dec 12, 2018
Almost Home Kids opens third residence in Illinois for children with health complexities
Its newest location is positioned as a prototype for national growth.
Healthcare Facilities | Dec 7, 2018
Planning and constructing a hybrid operating room: Lessons learned
A Hybrid operating room (OR) is an OR that is outfitted with advanced imaging equipment that allows surgeons, radiologists, and other providers to use real-time images for guidance and assessment while performing complex surgeries.
Healthcare Facilities | Nov 30, 2018
As telehealth reshapes patient care, space and design needs become clearer
Guidelines emphasize maintaining human interaction. Â
Healthcare Facilities | Nov 28, 2018
$27.5 million renovation of Salah Foundation Children’s Hospital completes in Fort Lauderdale
Skanska USA built the project.
Healthcare Facilities | Nov 7, 2018
Designing environments for memory care residents
How can architecture decrease frustration, increase the feeling of self-worth, and increase the ability to re-connect?
Healthcare Facilities | Oct 30, 2018
Orthopedic Associates of Hartford unveils plans for 45,000-sf surgical center
MBH ARCHITECTURE is the architect for the project.
Healthcare Facilities | Oct 29, 2018
Outpatient clinics bring the VA closer to injured veterans
The Department of Veterans Affairs is making efforts to improve its construction management and align its design guidelines to industry standards.
Healthcare Facilities | Oct 22, 2018
WSP-HKS JV signs deal for U.S. Navy construction work
The contract is not exclusive to the two firms, but it lets NAVFAC assign certain projects to them.
Healthcare Facilities | Oct 12, 2018
N.Y. builder pushes to get military trauma centers up and running quicker
To date, seven NICoE Spirit satellite centers have been built on the grounds of Fort Belvoir in Virginia, Camp Lejeune and Fort Bragg in North Carolina, Fort Campbell in Kentucky, Fort Hood in Texas, Joint Base Lewis-McChord in Washington, and Camp Pendleton in California.
Healthcare Facilities | Sep 7, 2018
Medical office construction isn’t keeping pace with the aging of America
A new Transwestern report suggests a “rethinking” of healthcare delivery approaches that lean heavier on technology.