The medical office investment market may have cooled off in the latter half of 2022, but don't let that fool you - there are plenty of reasons to be optimistic about the future of healthcare real estate.
Sure, the cost of debt has risen and access to it has become more difficult, and inflation and worker shortages have been tough on healthcare providers. But these challenges are temporary, and the fundamentals of the market remain strong.
The demand for outpatient health services will continue t
o grow, driven by an aging population, chronic disease, and the desire for convenient, low-cost care. Occupancy rates in medical office buildings are at an all-time high, and rents continue to rise. There's even a slowdown in new medical building deliveries on the horizon.
Investors may be taking a step back in the face of uncertainty, but savvy buyers know that this is an opportunity to snag a deal. Medical office buildings remain a "safe haven" investment, and we expect capital appetite to remain robust as we move into 2023.
Ambulatory Surgery Center of Western New York | Source: http://www.meengineering.com
For medical practices, there may be challenges ahead, but there are also opportunities. Sale-leasebacks of owned facilities, for example, could bring more attractive yields and terms than potential mortgage options.
All in all, the future is bright for healthcare real estate. Sure, there may be some bumps in the road, but the fundamentals of the market are strong and the demand for healthcare services is only going to continue to grow. So, for investors looking for a solid opportunity, look no further than the medical office market.