Special Report: Lessons of the recession

HEALTHCARE SECTOR MIGHT SEE LASTING CHANGES

By John Mugford

Brent Tharp (left) comments on the financial markets during the recent HREI™
Editorial Advisory Board meeting as Greg Venn and Sharon Harper look on.
HREI™ photo

By the end of 2009, some healthcare real estate experts predict a loosening of debt and equity capital, and a revival of medical office building (MOB) sales transactions.

But they say we won’t necessarily see a return to business as usual.

Healthcare has fared far better than most other forms of commercial real estate during the current economic recession. Yet even this sector has experienced – and continues to endure – some challenging times.

Those negative experiences could leave a lasting impression on how healthcare real estate firms do business, the experts say. The often painful lessons of the financial crisis could trigger tougher underwriting by lenders, more caution from investors, and a retreat by developers from the increasingly upscale design of many of the medical facilities built during the past several years.

As the Healthcare Real Estate Insights^™ Editorial Advisory Board meeting was winding down in Dallas in late 2008, the 19 board members in attendance were asked what they thought would be the major topics concerning healthcare real estate a year later, at the end of 2009.

Their discussion took place in a conference room at the offices of Trammell Crow Co. This is our final installment from that meeting. Past articles from the meeting, which have run in recent editions of HREI^™, have focused on board members’ insights into the MOB development pipeline for 2009 and beyond, the current and future state of the credit markets, the dire financial positions of many of the country’s hospitals, the acquisitions market for healthcare real estate, strategies healthcare real estate firms might use to be stay strong in the current recession, and other topics.