Despite the challenges this year with COVID-19, medical office projects continue to break ground. Openings are not keeping pace, resulting in an in-progress pipeline that continue to grow. As of 4Q the total square feet under construction stands at 47.6M, the largest since Revista has been tracking. This could certainly make for a big 2021 in terms of opens. Interestingly, the proportion of 3rd party developed projects breaking ground is increasing as the year progresses. (As opposed to being self developed by the hospital or provider.) In December, almost half of the 45 MOBs started were third party developed. In our annual Developer Survey report, developers have represented less than a third of projects started each of the last 5 years. Some of the most active developers breaking ground this year are Nexcore, Catalyst Healthcare and Johnson Development. Catalyst has several projects that started both in Indiana and Florida and Johnson Development began work on 3 projects for the VA in Michigan, Iowa & Missouri.
With Coronavirus surging and vaccine distribution under way, it’s clearly “all hands on deck” for providers and health systems. Third party management and development is likely much more appealing. Question is, will this trend continue into 2021 and beyond, or is this a temporary shift? Subscribe to Revista to keep up with the latest!
