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.”
Related Stories
Healthcare Facilities | Sep 8, 2023
Modern healthcare interiors: Healing and care from the outside in
CO Architects shares design tips for healthcare interiors, from front desk to patient rooms.
Giants 400 | Aug 22, 2023
Top 115 Architecture Engineering Firms for 2023
Stantec, HDR, Page, HOK, and Arcadis North America top the rankings of the nation's largest architecture engineering (AE) firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Aug 22, 2023
2023 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms
A record 552 AEC firms submitted data for BD+C's 2023 Giants 400 Report. The final report includes 137 rankings across 25 building sectors and specialty categories.
Giants 400 | Aug 22, 2023
Top 175 Architecture Firms for 2023
Gensler, HKS, Perkins&Will, Corgan, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Healthcare Facilities | Aug 21, 2023
Sutter Health’s new surgical care center finishes three months early, $3 million under budget
Sutter Health’s Samaritan Court Ambulatory Care and Surgery Center (Samaritan Court), a three-story, 69,000 sf medical office building, was recently completed three months early and $3 million under budget, according to general contractor Skanska.
Healthcare Facilities | Aug 18, 2023
Psychiatric hospital to feature biophilic elements, aim for net-zero energy
A new 521,000 sf, 350-bed behavioral health hospital in Lakewood, Wash., a Tacoma suburb, will serve forensic patients who enter care through the criminal court system, freeing other areas of campus to serve civil patients. The facility at Western State Hospital, to be designed by HOK, will promote a holistic approach to rehabilitation as part of the state’s vision for transforming behavioral health.
Healthcare Facilities | Aug 10, 2023
The present and future of crisis mental health design
BWBR principal Melanie Baumhover sat down with the firm’s behavioral and mental health designers to talk about how intentional design can play a role in combatting the crisis.
Market Data | Aug 1, 2023
Nonresidential construction spending increases slightly in June
National nonresidential construction spending increased 0.1% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. Spending is up 18% over the past 12 months. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.07 trillion in June.
Healthcare Facilities | Aug 1, 2023
Top 10 healthcare design projects for 2023
The HKS-designed Allegheny Health Network Wexford (Pa.) Hospital and Flad Architects' Sarasota Memorial Hospital - Venice (Fla.) highlight 10 projects to win 2023 Healthcare Design Awards from the American Institute of Architects Academy of Architecture for Health.
Designers | Jul 25, 2023
The latest 'five in focus' healthcare interior design trends
HMC Architects’ Five in Focus blog series explores the latest trends, ideas, and innovations shaping the future of healthcare design.