2023 Outpatient Development Report Recap
When looking at all outpatient projects, Hammes developed the most with a count of 12, for a total of 769,658 sf.
Archives for 2023
2022 Top Outpatient Developers – Developer Owned Projects
Overall, Revista tracked 44.9 million square feet of outpatient developments in 2022, with 18.8 million (42%) being done by third-party developers
Alternative Asset Sales Activity
What level of sales activity are we seeing around alternative types of medical real estate?
Are MOB Sales Taking Place in the Current Environment?
The year of 2023 has brought significant drops in sales activity across the commercial real estate sector. The higher cost of capital is driving investors into cautiousness and the healthcare real estate market is not immune …
ASCs – Past, Present & Future- An Observation
Over the last 30 years, there has been an influx in Ambulatory Surgery Centers (ASCs) for reasons including, but not limited to, physician demand, employee retention, rising case migration and …
Construction Slows in 1Q23
With 23.4M for MOBs and 27.7M for hospitals, both are falling off the highs seen in 2022.
Demand for Outpatient Space Growing Faster than Supply
It is no secret that many healthcare services and procedures are increasingly moving towards an outpatient setting. Advances in technology, cost efficiencies and other factors have enabled this move which has led to consistent and steady growth of demand for outpatient space, and the underlying supply of such space. Revista normally tracks the supply/demand picture through its reporting of absorption, completions and occupancy rates.
Exploring a Sale-Leaseback in Today’s Economic Environment
J As a physician-owner of your medical real estate, it is important to understand the factors that can impact the value of your building. Additional variables arise when partners have varying interest in the practice …
HCRE Construction Spending Peaks in 2023
Healthcare Real Estate (HCRE) spending on construction has established a recent peak in 2023. Revista tracks Hospital and Medical Office (or Outpatient Medical) construction based on total project values including land, hard and soft costs and buildout.
High Demand in the Sunbelt, Phoenix Tops the List
The Northeast and Pacific Coast markets have always had some of the highest occupancy rates for medical office buildings being the more expensive, high barrier-to-entry cities. However, considerable growth in …
Medical Office Rent Growth Accelerates
In the wake of record inflation, landlords have had increasing pressure to raise rents at a faster pace. Historically, MOB annual rent growth has been around the 2% mark, and …
MOB Cap Rates Continue to Expand in 2Q23
Within the past year, the average cap rate for a medical office building was 6.5. This is up about 60 basis points from one year ago.
MOB Construction Continues to Drop in 2Q23
Recently we’ve been observing a downward trend, which has been reinforced by the current quarter. On a quarterly basis, 2Q23 only had around 2 million square feet start construction.
MOB Construction Projects, Are All Types being Affected Uniformly?
If you have been staying up to date with Revista’s most recent construction data, you know that over the past few quarters, construction has been down across the board. However, the magnitude of the depression may depend on the characteristics of the project.
MOB Fundamentals Remain Steady
Development and acquisition activity is currently suppressed in the medical office sector. However, this does not reflect a wavering in the underlying performance of medical assets. The graph below is from our 3Q23 Industry Fundamentals Report, which tracks a group of large medical office portfolios containing approximately 150 million square feet. It shows the average NOI per occupied square foot, which has continued to tick up, now at a level of $23.20.
MOB Occupancy at Cyclical High Point while Office Continues Struggle
The office market continues to struggle with the volume of employees working from home or on a hybrid schedule coming out of the pandemic. Although historically viewed as a subsector of office, the dynamics of the users of medical office space are completely different.
MOB Rent Growth Acceleration Slows in 2Q
Historically, Medical Office Building year-over-year rent growth has been right around the 2% mark. During the pandemic shutdowns there was a meaningful slowdown, but it rebounded shortly after as businesses …
MOB Transaction Volume Cools in 4Q, Cap Rates Creep Up
Data from the end of 2022 is beginning to reflect what many are feeling on the ground with a noticeable dip in MOB transaction volume and an upward creep in …
MOBs Located on a Hospital Campus vs. MOBs Close to a Hospital Campus. Is there a Difference?
Historically, Revista has categorized medical office buildings (MOBs) into two categories, on a hospital campus or off. However, recently Revista has developed a third category, adjacent. These are the properties that fall within a quarter mile of a hospital campus footprint. Conventional thought suggests that on-campus assets demand a premium, but what about the buildings just outside of a campus?
Rate Cuts on the Horizon
For all of 2023 investors have been waiting for more clarity on the monetary policy path. The FOMC meeting last week provided what many have been waiting for. The median projection for the federal funds rate is now 4.6 for the end of 2024. This leaves room for three 25 basis point cuts throughout the year. While not shown in the graph below, the full range of forecasts for 2024 is 3.9 – 5.4. This indicates that all the meeting participants are predicting no rate hikes in 2024, which is a first for this year.
Regulation D – The 0% Reserve Requirement
The Regulation D Reserve Requirement, put in place by the Federal Reserve in 2020, is a measure designed to improve the stability of the financial system by requiring certain financial institutions to hold a minimum amount of reserves against their deposit liabilities.
Rehab Hospital Projects Maintain Strong Pipeline
Despite economic headwinds, rehabilitation hospitals have seen escalated development over the past couple of years. The chart below focuses on the scope of projects that started construction each year. We …
Rent Inflation Impacting Outpatient Sector
Revista recently held its 3Q23 Subscriber Webinar. One of the topics discussed was rent inflation. The charts below show Avg. NNN and Avg. 90th percentile base rents for medical office …
Strong Fundamentals in Florida Markets
Florida was the fastest growing state in 2022 with a total increase in population of 1.9%. Just about all of this growth is made up of migration into the state …