RevistaMed
Revista has updated its annual look at the size and scope of the health care real estate sector. This update measures the real estate size and value of general acute care hospitals and outpatient buildings across the contingent United States.
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 . . .
Columbus, Ohio is the 21st largest market RevistaMed tracks in terms of outpatient or medical office square feet. Columbus has been in growth mode for the past few years from a healthcare real estate perspective.
In partnership with Health Care Real Estate Insights (HREI), Revista has published their annual outpatient development report. The 2024 report covers all medical outpatient real estate developments that either broke ground or completed in the previous year . . .
The Revistamed Metro Rankings page provides an easy way to quickly measure the top 125 metro areas on key medical office metrics. The columns are sortable and users can also download the data to xls where even more columns will populate
Revista’s Entity Search is a large database of over 10,000 healthcare real estate owners, developers, providers and health systems. Search by location, number of properties or entity type to retrieve …
The average cap rate for medical office building (MOB) transactions moved up to 7% in the last quarter of 2023. This is up 90 basis points from one year prior. A pricing gap between on and off campus MOBs remains, with on campus coming in 30 basis points lower at 6.7%. Despite the strong underlying fundamentals, investor demand is being limited by stringent capital conditions . . .
During the presentation we discussed the top 10 demand markets (out of the largest 125). We ranked the markets top to bottom based on trailing twelve month (TTM) net absorption (defined as TTM absorption minus TTM completions).
2023 was a slow year for medical office developments, with around 12 million square feet of projects that broke ground. This is about 45% lower than the average over the past decade. However, 12 million square feet is still a substantial increase in supply, and it is interesting to observe how different markets are reacting. In the graph below
Revista held its 4th quarter, 2023 subscriber webinar recently. During the webinar, it was reported that occupancy rates were continuing to rise for Medical office properties in the top 50 metros.
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.
For healthcare tenants in costal markets such as Los Angeles, San Jose or San Francisco, it is understood that higher rent levels come with the territory. Historically hard to build, high demand markets on the coasts have allowed rent levels to build over the years. In fact, the 2 most expensive rent markets (of the top 50 metros) for MOBs in 3Q23 are San Jose ($45.81 avg NNN rent) and San Francisco ($41.00 avg NNN rent).
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.
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.
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 …
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 …
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?
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.