Healthcare CRE Surges In 2025

The healthcare real estate market is showing clear signs of recovery as we progress through 2025.

According to a recent analysis by Cushman & Wakefield, the sector is set for growth, fueled by solid fundamentals and improving market conditions. This rebound is evident in three key areas: financing, pricing, and buyer activity.

The market’s momentum is undeniable, with 2024 sales volume rising by a remarkable 61% year-over-year. This strong performance lays a solid foundation for continued growth into 2025, driven by the inherent stability of healthcare properties.

While the Federal Reserve remains cautious about rate cuts due to inflation concerns, Cushman & Wakefield projects a 50-basis-point reduction in 2025 and 2026. This relatively stable outlook provides investors and developers with more confidence, despite lingering concerns about potential inflationary pressures from tariffs.

Liquidity, which was tight in 2024, is showing significant improvement in 2025. Loan origination volume has increased by 7.4% year-over-year, with healthcare-related origination nearly doubling last year. However, it still trails 20% behind the 2017-2019 average.

Pricing dynamics are also stabilizing, offering investors a clearer view of the market. As of November 2024, overall property prices were down just 0.5% year-over-year, a major improvement from the 7.4% drop in November 2023. This uptick in market activity is helping with price discovery, which could lead to upward price pressure. Cap rates are expected to stabilize as well, making investment decisions more straightforward.

Private equity firms and real estate private equity advisors are expected to be the key players in the market recovery throughout 2025. While their activity in 2024 was lower than the eight-year annual average—partly due to a decline in 1031 exchange transactions—their renewed interest signals growing confidence in the sector’s long-term potential.

Source: GlobeSt.