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  • Writer's pictureAnvers Capital Partners

Medical Office and Life Sciences: Two Sides of an Investment Coin

In the dynamic world of commercial real estate, various property types usually exist in isolation. While industrial, multifamily, and office spaces each follow their unique trajectories, an intriguing intersection emerges in the realms of life sciences and medical offices. These sectors, though fundamentally connected to healthcare, offer diverse yet complementary avenues for investment.

Complementary, Not Competing
The essence of their relationship lies in their distinct roles. Life sciences are involved in the arduous journey of research and development, focusing on groundbreaking scientific discoveries and product innovation. Conversely, medical offices represent the clinical application side, akin to the 'retail' aspect of healthcare, delivering services directly to the populace.

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Unique Investment Perspectives
Nick Banks from Avison Young underlines the subtle yet significant differences and parallels between these two asset classes. Although both are healthcare-centric, their prerequisites in terms of location, infrastructure, tenant profiles, and investment strategies are markedly different.

Joel Berger of Bradford Allen adds that while they share the same universe, they are fundamentally different businesses with unique operational and investment requirements.

Medical Office Market Dynamics
Medical offices, often situated close to hospitals, have evolved significantly, now emphasizing patient experience, mirroring a retail-like environment. This shift has resulted in steady demand, allowing landlords to incrementally raise rents. Their strategic placement near residential areas enhances accessibility, making them a valued addition to communities.
Life Sciences: A Deeper Dive In contrast, life sciences necessitate closeness to major research universities and specialized infrastructures. This sector demands precise solutions for lab spaces, HVAC systems, and other specialized facilities, often leading to single-tenant buildings, unlike the more adaptable spaces of medical offices.

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Current Market Insights

The investment landscapes for both sectors are currently experiencing distinct challenges and opportunities. The medical office sector continues to thrive, driven by consistent demand and expansion into suburban areas. The life sciences sector, facing funding complexities and economic fluctuations, is adopting a more cautious investment stance, although the underlying demand persists.
Looking Ahead

Both sectors promise significant opportunities moving forward. The medical office market is bolstered by an aging population and a continuous need for healthcare services. Life sciences, despite current financial constraints, are poised for a rebound, fueled by ongoing research and innovation.

In essence, life sciences and medical offices represent two different yet interconnected facets of healthcare real estate investment. Their unique characteristics and evolving market dynamics offer a diverse range of investment opportunities. A deep understanding of these nuances is essential for informed investment decisions in these dynamic sectors.


Source Credit: This blog post is based on the article "Medical Office And Life Sciences: Two Sides Of An Investment Coin" by Erik Sherman, published on November 28, 2023.


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