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Thought Leaders: JLL 2018 Healthcare Real Estate Outlook

Investors are placing their bets on the growing medical office sector

The $1 trillion healthcare real estate market is becoming more diverse, with a shifting preference to outpatient medical care, leading to new real estate strategies to meet the demand for lower cost, patient-centric care in convenient community settings and more diverse facility types to improve the patient experience and win brand loyalty. Healthcare providers are altering their healthcare delivery and investors are taking note with real estate

capital increasingly flowing to outpatient facilities. Four key indicators demonstrate that investor confidence in the sector is warranted:

1.  MOBs boast stable long-term occupancy rates and steady pricing performance

2.  MOBs offer higher returns, consistently offering a 2 percent spread in cap rate over similar benchmarks for the last 5 years

3.  MOBs attract a high-quality tenant base

4.  Strong pipeline of new construction is keeping pace with demand

Top 2018 healthcare real estate trends

Interest in healthcare real estate is increasing as fast as the industry itself is growing. Rising patient numbers and real estate spending point to long-term demand and cycle resilience for investment in healthcare-related buildings.

1 The shifting healthcare landscape is continuing to push real estate strategies outside traditional settings.

Healthcare providers are getting creative with real estate strategy to capture growing patient demand — and that’s delivering more settings for care. The race is on to meet patients where they are and the growing number of medical office buildings (MOBs), healthcare-anchored retail centers, surgery centers and other healthcare specialty buildings is capturing that demand.

2 The appeal of the “durable-income” MOB.
Investors are doubling down on this growing asset class. Stable, long-term occupancy is expected to continue as off-campus locations gain stature as locations of choice for patients and providers alike.
3 More patience for inpatient
Hospitals remain a crucial piece of the healthcare delivery puzzle, serving the growing needs of an aging population, and the anchors to a continuum of care outside their campus. The key word here is “puzzle,” as the retailization of healthcare continues. Hospital campuses and outpatient care remain an anchor of the healthcare real estate ecosystem, with construction of new and expanded hospitals rising across the United States.

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