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
| Jan 19, 2011
New Fort Hood hospital will replace aging medical center
The Army Corps of Engineers selected London-based Balfour Beatty and St. Louis-based McCarthy to provide design-build services for the Fort Hood Replacement Hospital in Texas, a $503 million, 944,000-sf complex partially funded by the American Recovery and Reinvestment Act. The firm plans to use BIM for the project, which will include outpatient clinics, an ambulance garage, a central utility plant, and three parking structures. Texas firms HKS Architects and Wingler & Sharp will participate as design partners. The project seeks LEED Gold.
| Jan 10, 2011
Michael J. Alter, president of The Alter Group: ‘There’s a significant pent-up demand for projects’
Michael J. Alter, president of The Alter Group, a national corporate real estate development firm headquartered in Skokie, Ill., on the growth of urban centers, project financing, and what clients are saying about sustainability.
| Dec 17, 2010
ARRA-funded Navy hospital aims for LEED Gold
The team of Clark/McCarthy, HKS Architects, and Wingler & Sharp are collaborating on the design of a new naval hospital at Camp Pendleton in Southern California. The $451 million project is the largest so far awarded by the U.S. Navy under the American Recovery and Reinvestment Act. The 500,000-sf, 67-bed hospital, to be located on a 70-acre site, will include facilities for emergency and primary care, specialty care clinics, surgery, and intensive care. The Building Team is targeting LEED Gold.
| Dec 17, 2010
Arizona outpatient cancer center to light a ‘lantern of hope’
Construction of the Banner MD Anderson Cancer Center in Gilbert, Ariz., is under way. Located on the Banner Gateway Medical Center campus near Phoenix, the three-story, 131,000-sf outpatient facility will house radiation oncology, outpatient imaging, multi-specialty clinics, infusion therapy, and various support services. Cannon Design incorporated a signature architectural feature called the “lantern of hope” for the $90 million facility.
| Oct 18, 2010
World’s first zero-carbon city on track in Abu Dhabi
Masdar City, the world’s only zero-carbon city, is on track to be built in Abu Dhabi, with completion expected as early as 2020. Foster + Partners developed the $22 billion city’s master plan, with Adrian Smith + Gordon Gill Architecture, Aedas, and Lava Architects designing buildings for the project’s first phase, which is on track to be ready for occupancy by 2015.
| Oct 13, 2010
Prefab Trailblazer
The $137 million, 12-story, 500,000-sf Miami Valley Hospital cardiac center, Dayton, Ohio, is the first major hospital project in the U.S. to have made extensive use of prefabricated components in its design and construction.
| Oct 13, 2010
Hospital tower gets modern makeover
The Wellmont Holston Valley Medical Center in Kingsport, Tenn., expanded its D unit, a project that includes a 243,443-sf addition with a 12-room operating suite, a 36-bed intensive care unit, and an enlarged emergency department.
| Oct 13, 2010
Hospital and clinic join for better patient care
Designed by HGA Architects and Engineers, the two-story Owatonna (Minn.) Hospital, owned by Allina Hospitals and Clinics, connects to a newly expanded clinic owned by Mayo Health System to create a single facility for inpatient and outpatient care.
| Oct 13, 2010
Maryland replacement hospital expands care, changes name
The new $120 million Meritus Regional Medical Center in Hagerstown, Md., has 267 beds, 17 operating rooms with high-resolution video screens, a special care level II nursery, and an emergency room with 53 treatment rooms, two trauma rooms, and two cardiac rooms.
| Oct 13, 2010
Cancer hospital plans fifth treatment center
Construction is set to start in December on the new Cancer Treatment Centers of America’s $55 million hospital in Newnan, Ga. The 225,000-sf facility will have 25 universal inpatient beds, two linear accelerator vaults, an HDR/Brachy therapy vault, and a radiology and imaging unit.
