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Feature Story: HREI survey shows COVID-19 is taking a toll on the sector

Activity has slowed, but some developments, investments and leases are still moving forward

By John B. Mugford

Even the “recession-resistant” healthcare real estate (HRE) space is feeling the negative impact of the COVID-19 pandemic.

An exclusive new Healthcare Real Estate Insights survey released April 8 indicates that although about one-third of HRE deals and developments in the pipeline are continuing, those responding said about half their development projects and about two-thirds of their investment and leasing activity have slowed or been put on hold.

During the Great Recession of 2007-09, developing and investing in HRE, including medical office buildings (MOBs), was indeed a somewhat recession-resistant endeavor. But then – as now – many aspects of doing business in the HRE sector, most notably new business development, have slowed.

“New business development is not productive right now,” one survey respondent commented. “All our healthcare provider clients are in crisis mode.” However, the same individual added, “No deals have been cancelled and all deals under construction and already approved are proceeding.”

A similar sentiment was conveyed by a number of HRE professionals who responded to the anonymous survey, which was conducted April 1-7.

HREI asked readers to respond to a few queries under one umbrella question: “How is COVID-19 affecting your business?” The multiple choice survey included options to respond regarding development, financing and leasing activity, as well as telework. Twenty-eight people responded, so the survey is not “statistically significant.” But it is probably a fairly accurate reflection of how the COVID-19 pandemic has affected the HRE space.

As the HRE professionals confirmed,

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