Posted on September 28, 2017
According to CBRE’s inaugural report on the U.S. medical-office market, the steady demand for and investor confidence in healthcare-related workspace indicates it may be a “resilient sector, able to weather economic downturns and political changes.” The age 65-and-over population – now accounting for the highest per-capita healthcare spending – will nearly double by 2055 and drive an increased need for medical office space. Some findings include:
- “Cost containment is driving health care industry consolidation and fueling demand for less expensive delivery settings, such as medical office buildings and urgent-care facilities, as well as new technologies that can produce better patient outcomes at lower costs.”
- “Absorption of medical office space has outpaced new supply for the past seven years, lowering the segment’s national vacancy rate to 8% as of Q1 2017.”
- “Rising investor confidence in medical office space has resulted in increased transaction volume in the segment, which reached nearly $10 billion for the year ending Q1 2017 and pushed cap rates to a record-low average of 6.8%.”
The report includes 30 U.S. market profiles and identifies metropolitan areas with low concentrations of healthcare employment and rapidly aging populations, including Atlanta, Las Vegas and Denver. According to the report, these markets will need to ramp up healthcare employment to meet current and future needs.