Medical Office Building Sales Are Off To A Hot Start: $3.8 Billion In First Quarter 2022

/0 Comments/in , /by

The year 2021 got off to what could certainly be described as a lackluster start in terms of medical office building sales.

In fact, the first quarter of 2021 saw an MOB sales volume of just $2.1 billion, the second lowest total since Arnold-based Revista began compiling healthcare real estate data for its subscribers in 2015.

Of course, in no way was the moribund Q1 sales volume an indication of what was to come in the remainder of 2021, as Revista’s most recent and updated statistics indicate that last year’s MOB sales total not only broke the all-time record, but shattered it.

The final volume for 2021 came in at $18.3 billion, or 15.3 percent higher than the next highest total tallied by Revista: $15.5 billion in 2017.

 

Source: HREI

Developers Prepare To Break Ground On $35M Medical Office Park West Of Fort Worth

/0 Comments/in , , /by

A rapidly growing community west of Fort Worth will soon become home to a $35M medical office park aimed at improving healthcare access in the area.

A rendering of the new medical office park to be constructed in Willow Park (PHOTO CREDIT: Grace Hebert Curtis Architects)

Willow Park is the second-largest city in Parker County, an area that saw its population increase by 27% between 2010 and 2020, according to the U.S. Census Bureau. The 8.5-acre site acquired by real estate investment firm Velocis is located in the Interstate 20 corridor between Fort Worth and Weatherford, where a network of doctors has emerged to meet growing demand for medical care in the community.

“Our building is there to serve what I would call an underserved community,” Velocis co-founder and partner Mike Lewis told Bisnow. “The doctors are telling us that they have the patients, but the patients are driving to Fort Worth. This is giving an opportunity to serve them in their community instead of them going elsewhere for healthcare.”

According to census data, 86% of residents in Parker County were insured as of 2020. This high rate of healthcare coverage, along with the diverse mix of ages in the community, was appealing to Velocis.

“It’s a very stable community with good incomes,” Lewis said. “It’s not an area that you would go in and build and worry about patients not being able to afford healthcare.”

The project, developed by Prime Healthcare Properties and designed by Grace Hebert Curtis Architects, will include two speculative medical office buildings comprising 100K SF.

“Ethan Garner, senior vice president with JLL Dallas and leasing agent for the project, is already in talks with several potential tenants, including one practice that could occupy a large swath of space,” Lewis said. “By the time we finish this building, we should be very well leased, if not completely leased. We’ve done our homework and feel a high level of confidence that there is enough demand.”

Texas Health Willow Park hospital is located adjacent to the site, as well as several ambulatory surgery centers that are under construction.

“This project aims to build upon the area’s existing community of doctors,” Lewis said. “These will be very classic medical office buildings where you have doctors that want to be in a facility where you get a lot of referrals back and forth. We want doctors that complement each other.”

Demand from the nation’s aging population as well as the industry’s stability during down cycles have driven high levels of investment activity from companies like Velocis in recent years. Lewis said his team has been bullish on healthcare since the company’s inception in 2010, which kicked off with the purchase of a 100K SF MOB in Austin.

“Everybody needs healthcare, so it’s almost recession-proof,” Lewis said. “All of our assets in the medical field have been solid performers.”

Lewis said his team had planned for two phases of construction, but the high degree of demand will likely necessitate that both buildings are constructed concurrently. The project is expected to break ground this year and wrap up in 2023.

“We are very eager to get started, mainly because we have demand right now that would warrant us completing by a certain date,” Lewis said. “We want to make sure we are up and ready and that it works for these prospects we are talking to.”

 

Source: Bisnow

Investors Plan To Put More Money Into Healthcare

/0 Comments/in , /by

The I-word, inflation, is bad enough. But then there’s the R-word: recession. And some forecasters see the potential coming forward, according to the latest CNBC Fed Survey.

Not that it’s a given, but the trifecta of inflation, more hawkish Fed monetary policy, and issues coming out of Russia’s invasion of Ukraine have increased the bet to a 33% chance of one in the next 12 months.

That may be what a new CBRE survey picked up on. Distributed to “approximately 500 of healthcare real estate’s most influential healthcare real estate trusts (REITs), institutional healthcare investors, private capital investors, and developers throughout the United States” and responses coming from about a fifth of them, 85% believed that the healthcare real estate industry is “recession resistant.”

“Survey results suggest a very significant increase in capital allocated to healthcare real estate for 2022,” the report said. “In 2021, the total capital allocation provided by respondents in our survey was $10.9 billion, while actual transaction volume for 2021 ended at nearly $16 billion. This year, the total capital allocation from those unique firms who provided a figure (65 out of 86 firms) totaled $17.1 billion, which represents a 57% increase compared to 2021.”

This year, the firms that gave a capital allocation reported $17.1 billion going into 2022, a 57% increase. Given that, CBRE expects investors to allocate at least $25 billion in capital to the sector. Market caps are likely to drop with the capitol going in, and 96% of respondents expected cap rates on Class A on-campus to be below 6% this year, while 79% anticipate the average cap rate will drop below 5.5%.

“This can be ascribed to the ongoing increase in demand for high-quality healthcare real estate, the resiliency of healthcare real estate during the pandemic, and new funding sources actively exploring alternatives to traditional real estate products, such as office, industrial, multifamily and retail,” the report reads.

Similarly, the life science sector is also tremendously strong, with record level venture funding of $32.5 billion in 2021 and in 2022 40% of respondents thinking that life sciences properties, especially those housing biotech or pharma, should see a cap rate below 5%.

As might be expected from these numbers, a big majority—84%—plan to be net buyers of healthcare real estate, including all healthcare REITs and institutional investors that responded. Only 26% of current owners will be net sellers. With that much demand and low interest in dropping net ownership, that describes a coming challenge to obtain additional properties, meaning likely higher prices.

 

Source: GlobeSt.