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The COVID-19 Shutdown Tests Medical Office Buildings As An Investment

As U.S. health-care systems limit medical services to emergency and urgent care situations in the face of COVID-19, medical office buildings are standing empty, and the threat of tenants missing lease payments mounts.

Still, experts say, investors have every reason to keep MOBs high on their list of sector favorites. In addition to pent-up demand, strong sector fundamentals—aging Baby Boomers, expanded medical insurance coverage, new treatment options and shifts in service delivery—are expected to aid the MOB sector’s rebound and its love affair with investors.

“Medical office buildings and other outpatient care settings have been hot commodities in commercial real estate investment for the past several years,” according to Cushman & Wakefield’s 2020 Health Care Investor Outlook released at the end of last year. “Legacy investors are doubling down on the sector, while new investors are competing for the limited product supply.”

In the meantime, medical office building owners will have to wait for tenants and their patients to return.

Most owners are trying to not make an impulsive decision, to wait and see how this situation plays out,” said Allen Bolden, a partner with HB Medical Real Estate.

But despite the MOB market’s underlying strength, too much time may prove to be an enemy.

The fact that we don’t know if this will last another week or several months is why we can’t give solid answers to the future,” Bolden added. “The only thing we do know is the longer the economy is shut down, the more this will test the strength of MOBs as an investment.”

 

Source: CPE

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A Quick Shot Of Healthcare Trends

Cushman & Wakefield’s Healthcare Advisory Practice presents five trends related to medical office investment. From sale activity to leasing and absorption to GDP spending, this growing sector plays a significant role in the country’s economy.

The trend toward lower cost outpatient care and an aging MOB inventory are fueling everything from a rise in Urgent Care centers to growth in medical office rents to consistent construction output. The sector continues to look strong through the end of 2019. See below for Cushman & Wakefield‘s summary of Q3 medical office trends.

Source: HREI
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