Denver Ranks As The Ninth Largest Medical Office Market In The U.S.

Using information provided by CRE research and listing platform CommercialEdge, 42Floors looked at the 25 biggest industrial real estate markets and analyzed the last decade of medical office building construction activity — between 2012 and 2021 — to see how this asset class had blossomed into the spotlight for CRE investment firms.

Denver ranked as the 9th largest medical office market in the U.S.

Report Highlights:

• Denver ranks as the 9th largest medical office market in the U.S., with an inventory of 292 buildings, totaling 19.7 million square feet.

• 2.4 million square feet of medical office space were added to the market in Denver over the last 10 years, representing a 14% growth compared to 2012.

• In 2021, Denver logged the 3rd-largest completion of the year, with the 293,000-square-foot Denver Health – Outpatient Medical Center.

• Overall, the top 25 medical office space markets in the U.S. grew 13% since 2012, adding more than 52.7 million square feet.

Click here to read the full report.

 

Source: Mile High CRE

Nuveen Global Cities REIT Acquires Another $300M Worth Of Medical Office Buildings

Nuveen Global Cities REIT is doubling down on recession-resistant real estate with the $300M acquisition of 10 healthcare facilities.

The 661K SF portfolio covers medical office buildings in four high-growth markets — Dallas, Pittsburgh, Tampa and Atlanta, per a filing with the Securities and Exchange Commission. More than 65K SF of new or renewed leases have been signed since May, signaling strong demand despite a downturn in the economy.

“These buildings are leased to best-in-class healthcare providers that are significantly invested in their space, with nine of the ten assets featuring tenants with imaging, surgical and/or oncology build-outs,” co-President and Lead Portfolio Manager of GCREIT Richard Kimble said in a statement.

The assets were 96% leased at the time of acquisition and are either newly constructed or newly renovated, according to the filing. Lease terms are on average 5.7 years and include a 2.5% annual bump in rent. More than 20% of the REIT’s investments and 1.2M SF of its portfolio are now concentrated in healthcare, per the filing. Earlier this year, CBRE predicted that about $25B worth of capital would flow into the sector this year, much higher than the nearly $16B invested in 2021.

That estimation may prove slightly off given the dip in activity seen at the midpoint of this year. Transaction volume in Q2 landed at about $2.9B, down from the $3.3B seen in the second quarter of last year, according to Commercial Property Executive. During the same period, though, average rents increased 20% to $356 per SF year-over-year.

“Medical office investment remains highly desirable as the underlying market dynamics for leasing and resale remain strong,” Zacuto Group Managing Director Jake Zacuto told Commercial Property Executive. “Medical tenants overall have very low default risk and tend to offer stability even during uncertain times.”

GCREIT is not alone in its strategy to invest in safe haven assets. In late August, CBRE Investment Management announced it would acquire a 282.6K SF, four-building MOB portfolio in Orange County, California, via a joint venture with Healthcare Realty Trust, according to GlobeSt.

Earlier, LTC Properties Inc., a California-based REIT, announced it would sink $62M into a joint venture to acquire three skilled nursing centers in northern Florida, per The Bakersfield Californian.

Source: Bisnow

South Florida Is Changing, And So Is Healthcare Construction

As people flock to South Florida, demand is rising for new construction in housing, transportation and healthcare.

But in the face of supply chain challenges, escalating prices and a tight labor market, experts in the field believe the success of new projects hinges more than ever on timely decisions and collaboration.

“There’s been a 180-degree shift over the past few years,” says Operations Manager Johnathan Peavy at Robins & Morton’s Miami office. “In the early days of the pandemic, supplies, material and even labor were readily available. We anticipated some supply chain issues due to the pandemic, but no one anticipated the ‘Texas Freeze,‘ which compounded the supply chain woes. Along with secondary shutdowns to heavy manufacturing markets, these have created a title wave of supply chain issues.”

Staggered factory shutdowns have left lingering backlogs of construction supplies, from electrical components to building materials. The problems are compounded by the ongoing supply chain issues and a very tight construction labor market, with cost escalations increasing budget volatility.

At Robins & Morton, supporting clients in a changing market is a top priority – and that process starts on day one with a commitment to transparency and collaboration.

“We want to be available to help every step of the way; not only in building, but in budgeting, scheduling, procurement and approval,” says Peavy. “Making smart choices about which materials to use and when to order them. Or helping the client plan for volatility in the market – for example, carrying over a percentage of the budget each month to be ready for inflation or price hikes.”

The firm’s collaborative approach serves as an essential strategy when the company faces uniquely challenging projects – such as rebuilding Baptist Health Fishermen’s Community Hospital in Marathon. That same strong communication is key to overcoming market challenges at Robins & Morton’s projects across South Florida, including Jupiter Medical Center’s Surgical Institute Expansion, BHSF Boca Raton Regional Hospital and University of Miami Health System.

“There’s no one-size-fits-all solution,” adds Senior Project Manager Edwige Clark. “It’s about looking at the data you have and trying to spot risks and potential pitfalls before they happen – but the more you can communicate, the more effective all parties can be. We’re navigating this together.”

Those close partnerships help futureproof healthcare facilities. Often, that starts with designs that can significantly reduce the environmental footprint and utility costs. For tropical and coastal environments like South Florida, structures need to withstand humid environments, heavy winds, and potential flooding, and hospitals must remain operational to serve patients during hurricanes or other natural disasters.

“At the end of the day, we’re doing more than meeting parameters. We’re building for people: for healthcare workers, for expecting parents, for folks recovering from illness or injury,” says Clark. “When the construction is finished; it’s in the choices we made that will impact those people for a long time.”

As flexibility in work and transportation allows people to move “where they want to live” and not only “where they need to live,” South Florida is a key destination. An influx of new residents will fuel growth and new developments, which will include healthcare facilities to serve the growing population.

“If so, South Florida will be ready,” says Peavy. “Over the next three to five years, it’s likely the region will continue to grow – and with it, the cycle of new construction. But we’re rising to meet that demand with strong partnerships, new talent and strategies that will help our clients adapt in the years ahead.”

 

Source: South Florida Hospital News