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
| Oct 30, 2014
Perkins Eastman and Lee, Burkhart, Liu to merge practices
The merger will significantly build upon the established practices—particularly healthcare—of both firms and diversify their combined expertise, particularly on the West Coast.
| Oct 21, 2014
Passive House concept gains momentum in apartment design
Passive House, an ultra-efficient building standard that originated in Germany, has been used for single-family homes since its inception in 1990. Only recently has the concept made its way into the U.S. commercial buildings market.
| Oct 21, 2014
Hartford Hospital plans $150 million expansion for Bone and Joint Institute
The bright-white structures will feature a curvilinear form, mimicking bones and ligament.
| Oct 16, 2014
Perkins+Will white paper examines alternatives to flame retardant building materials
The white paper includes a list of 193 flame retardants, including 29 discovered in building and household products, 50 found in the indoor environment, and 33 in human blood, milk, and tissues.
| Oct 15, 2014
Harvard launches ‘design-centric’ center for green buildings and cities
The impetus behind Harvard's Center for Green Buildings and Cities is what the design school’s dean, Mohsen Mostafavi, describes as a “rapidly urbanizing global economy,” in which cities are building new structures “on a massive scale.”
| Oct 13, 2014
Debunking the 5 myths of health data and sustainable design
The path to more extensive use of health data in green building is blocked by certain myths that have to be debunked before such data can be successfully incorporated into the project delivery process.
| Oct 12, 2014
AIA 2030 commitment: Five years on, are we any closer to net-zero?
This year marks the fifth anniversary of the American Institute of Architects’ effort to have architecture firms voluntarily pledge net-zero energy design for all their buildings by 2030.
| Oct 8, 2014
Massive ‘healthcare village’ in Nevada touted as world’s largest healthcare project
The $1.2 billion Union Village project is expected to create 12,000 permanent jobs when completed by 2024.
| Oct 3, 2014
Designing for women's health: Helping patients survive and thrive
In their quest for total wellness, women today are more savvy healthcare consumers than ever before. They expect personalized, top-notch clinical care with seamless coordination at a reasonable cost, and in a convenient location. Is that too much to ask?
| Sep 29, 2014
10 common deficiencies in aging healthcare facilities
VOA's Douglas King pinpoints the top issues that arise during healthcare facilities assessments, including missing fire/smoke dampers, out-of-place fire alarms, and poorly constructed doorways.
