The year 2020 has instilled a good amount of uncertainty surrounding the economy. Healthcare real estate has had a particularly interesting year, simultaneously strengthening in some areas and scaling back in others. But thanks to a few projections and forecasts, we can start to see the outlook of healthcare real estate for 2021.
In October of 2020, GlobeSt shared information regarding the recent Urban Land Institute survey results. This survey, which included 37 real estate organizations and 43 analysts and economists, suggested that the economy will rebound between 2021 and 2022. The survey forecasted a GDP increase of 3.6% in 2021 and 3.2% in 2022. It also projected that 2021 and 2022 would yield job growth of 3.5 million and 3 million, respectively. Those are promising numbers for the future of the U.S. economy, and probable economic growth is a good sign for healthcare real estate.
In another survey, cited by GlobeSt, biotech and life science real estate were listed as some of the most attractive investment opportunities. Not all sectors are gaining that kind of attention. In fact, in the National Association of Realtors Q3 survey results, 52% of respondents said that vacant malls are being transformed into new uses other than retail. Healthcare centers or hospitals are some of the new uses for these unoccupied retail centers.
Sale-Leasebacks
In 2020, while some medical facilities received an influx of patients due to the virus, others remained closed for a lengthy amount of time. Those who are looking for a financially creative way to continue to occupy their facilities may find that sale-leasebacks are the right solution. In a sale-leaseback, the healthcare real estate owner sells their property and leases it back from the new owner. The sale of their healthcare real estate asset allows them to gain fast access to capital for other uses. Sale-leasebacks are an especially viable option now that interest rates will remain low through 2021.
Telehealth
In 2020, healthcare systems made great strides in the area of telehealth. As legislation was adjusted to facilitate a massive shift to telehealth, health systems across the country adapted their business models almost overnight. While telehealth is likely to remain a part of the future of healthcare, it won’t replace the use of a traditional clinic appointment. Telehealth is not the appropriate setting for many health situations, especially in the case of severe medical issues. And insurance reimbursement is often an issue.
Some medical groups may need to decrease their footprint due to more online visits, but others may need to hold onto their additional space to account for social distancing. Some medical settings may also need to provide flex spaces for their staff to handle telehealth appointments. If telehealth continues to thrive in 2021, medical groups may need to adjust the build-out of their current facilities.
Technology
Many health facilities have adopted new technologies in the wake of the pandemic. Some health systems have now installed temperature-taking technologies to limit in-person contact with visitors. In one example, Vanderbilt University Medical Center installed infrared cameras that read each visitor’s temperature as they enter or exit the building. Technologies like these, as well as some of the other, newer technological advancements, will continue to shape the medical field and its use of medical real estate. And due to internet use increasing in recent times, internet connectivity may eventually have an impact on land value.
Property Maintenance and Sanitization
Property maintenance has reached the top of the priority list for the foreseeable future of all commercial real estate, but especially for healthcare real estate. Employees, patients, and other guests expect floors, counters, and interior furnishings to be completely spotless. According to Forbes, this is one area in which healthcare real estate owners should plan to up their investment.
Healthcare real estate is facing significant challenges in 2021. But HBRE’s team of healthcare real estate advisors are staying up-to-date on market information. For more insights regarding healthcare real estate, visit the Medical tab of our website. Or, contact an HBRE team member to learn more about their healthcare real estate services.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
