There is a significant reason to believe that the medical real estate sector will grow in the post-pandemic market. In the past, healthcare real estate seemed to have recession-proof qualities. Its continuous growth over the last several years and the recent record-breaking expansion phase of the market cycle all pointed to its ability to thrive. But, like all other sectors, medical real estate felt the effects of the year 2020.
The good news is that industry experts are now projecting where medical real estate will land in the post-pandemic market. Employment numbers, consumer spending, demographics, and other factors point in a positive direction for healthcare real estate. It seems that medical real estate owners, landlords, and investors have plenty to take note of as we begin 2021.
The Data
According to an article published by GlobeSt.com, consumer spending in the healthcare industry dropped at an annual rate of -54% in the spring of 2020. That drop resulted in a record decline in healthcare employment. But by October of 2020, there was a recovery in employment for doctors, dentists, and many outpatient care positions. About 63% of healthcare jobs lost had been recovered, compared to the 54% of recovery across all jobs in the U.S. GlobeSt.com noted in their December article that healthcare employment had not yet reached its pre-recession levels. But the growth in healthcare employment is a promising sign for the future of the industry.
According to the Centers for Medicaid and Medicare Services, healthcare spending in the U.S. could actually rise by $1.9 trillion between 2020 and 2027. Those numbers indicate that more patient procedures and treatments will be underway. And medical real estate will need to accommodate that patient increase.
The Demographics Factor of Medical Real Estate
Demographics play an important role in the post-pandemic state of medical real estate. The aging Baby Boomer generation is a prime example. As this age group began to reach retirement age, the healthcare industry braced for an influx of patients who would need more specialized care. During the next 10 years in the U.S., the 65 and older age group will increase to 1.7 million people yearly. Healthcare professionals will face the need for medical space to treat these patients. And now, because of the pandemic’s effect on this age group, treatment space has become even more of a necessity.
Healthcare Is E-Commerce Resistant
While a sector like retail strains against the substantial shift to e-commerce, the healthcare sector is largely e-commerce resistant. Telehealth has certainly played a more significant role within the last year, and some basic medical appointments can now take place online. But many patient needs will continue to require in-person treatments and procedures, which means doctors’ offices, outpatient facilities, and hospitals will remain vital to local communities. And this essential, physical real estate space makes the medical sector an attractive option for commercial investors.
Medical Real Estate Healthcare Developers
Revista explains that many developers are back at it, working on projects for both health systems and individual physicians. A chief development officer with NexCore Group LP told Revista they currently plan to break ground on about $150 million worth of medical office building projects. Many other developers and related healthcare real estate groups also noted their strong trajectory leading into 2021.
HBRE’s Trusted Team of Healthcare Real Estate Advisors
As medical real estate begins to trend in an upward direction, health systems and individual physicians alike need to make sure they have a solid healthcare real estate team on their side. The HBRE team’s collective years of commercial real estate experience set them up to provide a wealth of resources and detailed answers for both tenants and landlords. Their focus on the medical real estate sector gives them a unique vantage point and skill set to serve medical personnel. Healthcare professionals can trust HBRE to serve their commercial real estate needs as the medical real estate sector anticipates post-pandemic growth.
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.
