Medical Office Buildings Poised For Quick Recovery

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While hospitals and health-care facilities have been inundated by an influx of COVID-19 patients, many medical offices that offer non-emergency services have seen the opposite occur.

The property type’s solid fundamentals prior to the virus, however, promise a relatively rapid rebound when the economy is up and running again, according to Marcus & Millichap’s April special report on medical office buildings.

With many shelter-in-place orders in effect, communities across the U.S. are avoiding unnecessary travel and exposure, including those patients seeking elective surgeries or nonessential surgical and dental procedures. As patients decide to reschedule their appointments until further notice, many medical offices aren’t generating revenue and have had to partially, or fully, close.

The Post COVID-19 MOB Market

The COVID-19 pandemic has already left its mark on different facets of commercial real estate like office leasing, construction and retail. While the medical office building market was not spared, its strong market fundamentals prior to the emergence of the new coronavirus offer signs of a healthy market after the pandemic ends.

The national vacancy rate for medical office buildings was 90 basis points below the trailing 10-year-average of 9.7 percent, according to the report. The U.S. market also saw 6 million square feet of medical office space absorbed in 2019. Following demand, the below-average availability of medical offices has led to a steady stream of new properties, with deliveries hitting 10 million square feet. The statistics have attracted the attention of private investors looking for assets between $1 million and $10 million.

Once the COVID-19 pandemic is under control and the economy recovers, the medical office building market is expected to bounce back. The combination of an aging population, expanded medical insurance coverage and new treatment options equate to a growing demand for health care and the medical offices that come with it. Once the economy begins to return to normal, the backlog of work due to closed offices and rescheduled or canceled appointments will likely bring a sudden influx of work for medical-office staff.

And once the market returns to normalcy, the report noted that well-located assets with the infrastructure to handle modern medical needs will be in high demand. Specifically, medical office building demand may grow in non-urban markets as younger Millennials begin to move away from urban centers.

 

Source: Commercial Property Executive

Medical Campus In Highlands Ranch Colorado Sells For $33.5 Million

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A sought-after three-building medical office campus in the heart of Highlands Ranch sold for $33.5 million to a real estate investment trust specializing in medical office properties.

Healthcare Realty, under the name Ridgeline Medical LLC, according to public records, purchased the Ridgeline Medical Campus at 9135, 9137 and 9139 S. Ridgeline Blvd. It was sold by Bancroft Capital, which paid $21.25 million for the campus in 2016.

Comprising 136,994 square feet, Ridgeline was 93% leased to tenants, including Children’s Hospital Colorado, Centura Health and Kaiser Permanente.

The campus is located near the UCHealth Highlands Ranch Hospital, which opened in June 2019, and Children’s Hospital Colorado South Campus, Highlands Ranch, which opened in January 2014. As well, Ridgeline is located adjacent to the Highlands Ranch Town Center, which offers a variety of retail amenities.

Constructed in 2001 as a suburban office park, the buildings were converted to medical office to meet the demand for the product type in the market and is one of the few outpatient medical office campus locations near the two hospitals in Highlands Ranch.

Ridgegate Medical Campus’ on-site amenities include a fitness center, showers and lockers, outdoor seating and a conference room.

CBRE’s Chris Bodnar, Lee Asher, Ryan Lindsley, Tim Richey and Charley Will represented the seller.

“The deal received a significant amount of interest from medical office investors across the country who saw the opportunity for full medical conversion at higher rents, as well as the three anchor tenants,” said Bodnar.

The buyer was able to close within a week of signing the purchase and sale agreement, all cash.

Bancroft, a privately held real estate investment firm based in Manhattan Beach, California, also owns Highland Ranch I & II, a two-building, 152,208-sf office complex at 630 and 640 Plaza Drive, as well as Sixth Avenue West, Denver Highlands and a number of other Colorado assets.

Ridgegate represents the latest addition to Healthcare Realty’s Denver area portfolio, which at year-end totaled 651,237 sf.

 

Source: Colorado Real Estate Journal

New Multi-Tenant, On-Campus Medical Office Building Breaks Ground In Cedar Park, Texas

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MedCore Partners, a national healthcare real estate development and brokerage firm headquartered in Dallas, TX, just announced the groundbreaking of its latest development, “Hill Country Medical Plaza.”

Hill County Medical Plaza

Located at the entrance of Cedar Park Regional Medical Center at Medical Parkway and C-bar Ranch Trail in Cedar Park, Texas, this state-of-the-art, two-story, 29,600 square foot Class A medical office building (MOB) will house complementary services to those offered next door in the 93-bed hospital.

Thus far the project is already 77% pre-leased to tenants including Texas Digestive Disease Consultants, Hill Country Endoscopy Center, and a compounding pharmacy. This mix of specialties will work to create an extensive network of referrals and increased convenience for patients in this market.

Designed by Felder Group Architects, the project is scheduled to be completed in October of 2020 and is being built by IE2 Construction, Inc.  MedCore Partners is a full-service real estate company catering exclusively to the healthcare industry.

 

Source: yahoo! finance