Recently, the number of new construction projects has been low for the medical real estate industry. However, certain property types have been going against the current and have seen higher activity than usual. Two that stand out are behavioral health hospitals and rehab hospitals. The chart below shows the amount of square footage that started construction over the past 9 years on a trailing 12-month basis (TTM). The past two years have been elevated, with a total oscillating between 2.5 and 3.5 million square feet. Looking at the two property types separately, rehab hospitals peaked at the start of 2022 and have stabilized at higher-than-average levels. Behavioral health really began to jump in 2023 and still remains high. The demand for care at these facilities is exceptionally strong. Mental health issues have been at the forefront, especially since the pandemic. This means that despite construction headwinds, these projects are still moving forward.
