2022 real estate trends to watch Multifamily recovery: Multifamily and retail real estate markets have largely recovered from the early days of the pandemic. These recapitalizations are often the start, or the seeding, of new [], Posted in Companies & People, Transactions, Headwinds are likely to slow activity, but the need for projects will remain strong By John B. Mugford With so many economic headwinds facing almost all business sectors, even the recession-resistant healthcare real estate (HRE) sector, why is a group of development professionals involved in the HRE space remaining so optimistic? This website does not constitute an offer to sell or buy any securities or other investments. In 2022, we can continue to expect technology to be at the forefront of healthcare delivery. Activities and Societies: Finance Club. During the depths of the COVID crisis, MOB annual investment volume declined by 12.7%, according to Real Capital Analytics. The information provided does not take into account the specific objectives or circumstances of any particular investor or suggest any specific course of action. Despite the pandemic, rent collections among MOB tenants remained strong. Absorption rates are especially high in the Sun Belt region where robust population growth is driving demand for medical office space. The pandemic aside, healthcare occupations are expected to be in high demand for years to come. Similarly, as competition for skilled healthcare workers increases, facilities located in a retail environment may find it easier to attract and retain staff. Areas with a growing elderly population, for instance, are often considered strong candidates for MOB facilities as demand for healthcare services among this demographic tends to increase after the age of 65. Office vacancies were at 12.6% mid-2020 vs 8.6% for MOB vacancies. Our portfolio includes medical, retail, industrial and office properties. The transaction values the portfolio at $1.78 billion and is expected to generate $1.3 billion in proceeds for Medical Properties Trust. Improve your working capital, reduce fraud and minimize the impact of unexpected disruptions with our treasury solutionsfrom digital portals to integrated payables and receivablesall designed to make your operations smoother and more efficient. Overall, the future of multifamily looks bright, with a couple notable exceptions. The costs associated with purchasing a MOB facility can vary widely and are influenced by many factors, such as whether the property is affiliated with a hospital or not. Ownership of medical office buildings can take many forms, ranging from physician-owned properties and those owned by hospital systems to properties owned by much larger real estate investment groups, including real estate investment trusts (REITs) and other institutional investors. The new medical office building provides an opportunity to [], Posted in Breaking News, Outpatient Projects, Per Share Net Loss of ($0.24) and Normalized FFO of $0.43 in Fourth Quarter 35% Growth in Net Income and 4% Growth in Both NFFO and AFFO, on a Per Share Basis, in Full-Year 2022 BIRMINGHAM, Ala.(BUSINESS WIRE)Medical Properties Trust, Inc. (the Company or MPT) (NYSE: MPW) today announced financial and operating results for the [], Posted in Breaking News, Companies & People, REIT Report, Healthcare real estate platform created alongside Elliott Bay, a leading investor and manager of mission-critical healthcare facilities across the US Exclusive partnership will assemble a diversified portfolio of outpatient healthcare assets leased to leading specialty providers, hospitals, and health systems nationwide Marks the third real estate platform established by Pantheon since inception of its real [], GAAP EPS fell 21% for FY 2022 to $4.29 Core EPS rose 7% for FY 2022 to $5.69 DALLAS(BUSINESS WIRE)CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the fourth quarter and year ended December 31, 2022. Exclusive discounts on ALM and GlobeSt events. According to CBRE data, the average cap rate on sales of MOB facilities compressed by about 20 basis points year-over-year in 2020, with the average cap rate for portfolio sales declining by 100 basis points to about 5.52%. Before investing in a medical office building, buyers should be sure to understand the distinctions between Class A, Class B, and Class C medical office real estate. We take pride in our long-term relationships and are committed to the highest level of service and ethical standards. Commercial, Residential, Industrial, Retail, Office. Its time for owner/operators to embrace digital rent collection solutions . The sectors resiliency, as well as strong underlying fundamentals, has increased investor appetite for healthcare-related real estate. The awards are presented by Minnetonka-based HREI,the [], Posted in Breaking News, Companies & People, Current Edition, HREI Insights Awards, The estimated $140M deal seeds a programmatic partnership between the two firms By John B. Mugford Portfolio recapitalizations have been taking place at a rapid clip in the healthcare real estate (HRE) sector in recent years, including a record-setting 10-plus such deals in 2021. Published: Feb. 26, 2023 at 5:26 a.m. This allows physician practices to refer patients to one another (e.g., a primary care doctor referring a patient to a specialist), which has become increasingly common as healthcare becomes more technical and specialized. It only took a global pandemic for people to reconsider. In the first quarter of 2022, medical office building (MOB) sales topped $3.3 billion, and the market remains strong as we move forward in 2023. At the very least, technology will continue to be vital to healthcare in 2022 and continue to grow and evolve. Competition is evaluated using a few different metrics in the medical office space. Given the trends outlined above, its no wonder why. Economic headwinds have given investors pause at the start of 2023, fueling cautious strategies and a heightened focus on tenant quality. The Fed will continue raising rates until it sees a marked reduction in inflation nearer to its 2% target. Over the last six to eight years, medical office rents have stayed pretty much within a $4.00/SF range. In the third quarter, CoStar (a commercial real estate database) MOB rates averaged a slight decline with average asking net rates of $22.30 per square foot (PSF). Navigating interest rate disruption: How real-time data can facilitate better CRE decisions amid volatility. What does this mean for CRE professionals? During an investors due diligence process, theyll also want to consider a feasibility study. Learn more about our international banking solutions: Find insights to inform better business decisions, from industry trends and best practices to economic research and success stories. As we navigate the 2022 commercial real estate asset classes, keep an eye on these trends and opportunities. Abby is a recent graduate of Quinnipiac University with a BA in Political Science. They are generally located in prime locations with significant roadside visibility. Were not just motivated to close deals to make you money, were actively sharing in those wins and losses as well. This is especially true when leasing to hospital-affiliated tenants. Nevertheless, for those willing to understand the sectors nuances, a medical office can be a tremendous addition to an investors portfolio. Employment has been increasing since mid-2020 and by Q4 2020, was down only 1.5% year-over-year compared to 6.0% for the labor market as a whole. Learn more today. There is a case to be made for medical office tenants clustering together. According to Colliers, office vacancies were at 12.6% in mid-2020 vs. just 8.6% for medical office buildings. The property consists of over 178,000 square []. Class B medical office real estate falls somewhere in between and may have Class A and Class C real estate characteristics depending on the property. Nationally, there was 15.3 million square feet of net absorption in 2020 with just 13.7 million square feet of space delivered. In the third quarter, CoStar (a commercial real estate database) MOB rates averaged a slight decline with average asking net rates of $22.30 per square foot (PSF). Below, we look at some of the critical considerations when evaluating which medical office building to add to your real estate investment portfolio. Our portfolio includes medical, industrial, retail, and office properties, with deals ranging from $1M to $25M. Recent U.S. Office MarketBeats. Medical office properties are expected to see a strong rebound in demand this year once the COVID-19 virus recedes. Financial Results. Atlanta and Chicago are tied for the greatest amount of medical office space under construction among the top ten metro areas, with both at 1.7 million square feet under construction. Medical office occupancy is relatively stronger than the commercial office sector and was significantly less disrupted by pandemic, with medical office asking rents averaging 2% growth year over year for the past five years and reaching an average $23 per square foot triple net by mid-year 2022. The current commercial real estate (CRE) landscape faces disruption from economic and geopolitical fallout. They should be sure to consider the cost of any potential building renovations and/or costly tenant buildouts, as well as any necessary operational improvements. The transition to outpatient facilities has been an ongoing trend over the last decade, and it accelerated during the pandemic. In other words, they have the money to elevate and stabilize these otherwise outdated properties to help bring them up to a different marketable standard. The distinction between Class A, B, and C medical office real estate is essential to investors considering their investment strategy. Subscribe to our commercial real estate newsletter. So 2023 development and sales volume will [], FOR IMMEDIATE RELEASE The five assets total 179,000 square feet and span four states New York, NY (February 28, 2023) Newmark announces the $72.7 million sale of a fivebuilding, Class A medical office building portfolio. All Rights Reserved. Medical offices, once considered a niche product type, actually proves to be less risky than other niche real estate investment alternatives - something the investment community is starting to realize only as of late. Global Medical REIT Inc. GMRE (the "Company" or "GMRE"), a net-lease medical office real estate investment trust (REIT) that owns and . As with any investment, MOBs offer unique opportunities and considerations. Based on independent reports of properties and portfolios $2.5 million and greater. A MOB feasibility study will include a look at the health and wellness of the population, including the age ranges of residents. Class A real estate will generally have solid and creditworthy tenants who have signed long-term leases. The fourth quarter brought some relief from mounting macroeconomic challenges as inflationary pressures wane, but office tenants remain cautious as they adjust to rising costs of capital and falling valuations. CBRE's Medical Office & Healthcare practice is the leading provider of valuation and advisory services for the medical office and healthcare sectors. Of course, how (and how much) an investor wants to invest will undoubtedly guide their decision on which medical office building is best. Oct 2022 - Present5 months. In the Sun Belt region, where population growth among older Americans is driving MOB demand to new highs, cap rates average about 60 basis points lower than the national average. Medical professionals seeking assistance in buying, selling, or leasing healthcare real estate can trust our team to serve them to the best of our ability. The implied trends presented by CoStar and Revista are basically the same except for a bit of difference in the data from the two property statistics providers. Master of Business Administration (MBA)Finance. Some markets, like Philadelphia, have less than 500,000 SF of development in the pipeline. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest. Shovels hit the ground Friday, February 10 in a celebration attended by Caddis executives and other project stakeholders. The average cap rate for individual MOB sales dropped to 6.61% during this same time (dipping below the previous record lows of 6.7% in Q3 2016). As of February . Click the links below for secure access to your accounts: We examine industry trends, opportunities and challenges as commercial real estate owners and investors head into the new year. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. In addition to the low vacancy rate, CRE spaces have been converted into laboratory spaces to meet demand. Individual investors are following suit. Is the Red-Hot Industrial Market Beginning to Cool? Equity Analyst, 360 Huntington Fund. According to one source, telehealth usage is 38 times higher than before the pandemic. 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