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Feature Story: MOB development likely to take a hit in 2021

Even so, upbeat InterFace panelists say there are opportunities out there

By John B. Mugford

The InterFace Healthcare Real Estate Carolinas development panel discussion included (clockwise from upper left) John Stubbs of Davis More Capital, Tommy Catone of Summit Healthcare Group, Alex Stacy of Catalyst HRE, Cullen Pitts of McMillan Pazdan Smith Architecture and moderator Murray W. Wolf of HREI™. (HREI™ photo)

As the COVID-19 pandemic continues, it has become clear that medical office buildings (MOBs) are one of the most resilient, most likely to survive any type of economic slowdown or national crisis product type in commercial real estate.

However, one aspect of the business — development — is suffering and could suffer a bit longer, perhaps well into 2021, as health systems and providers nationwide try to recover from the financial hardships they have suffered in coping with the pandemic.

And yet, even as spikes in cases plagues some regions, there are signs of hope, as requests for proposals (RFPs) for development projects from providers are starting to pick up again as many systems continue to look to expand their ambulatory networks, which have become even more valuable in the COVID-era.

These were a couple of the important messages conveyed by a panel of healthcare real estate (HRE) professionals focused on medical office building (MOB) development during the 10th annual InterFace Healthcare Carolinas conference put together by the InterFace Conference Group, part of Atlanta-based France Media.

Typically held in Charlotte, N.C. in the spring, this year’s conference became a virtual one on Oct. 2 as a result of the pandemic.

Concerning the slowdown in development, Tommy Catone, a principal and co-founder of Winston-Salem, N.C.-based Summit Healthcare Group, said he “probably had, in my 20 years of just healthcare (development) … the best pipeline I’d ever had in my career. (But that) went from full-on, 10-yard line, six deals, to zero almost overnight.”

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