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MOBs Continue To See Demand As They Adapt To Market Changes

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The medical office building (MOB) sector continues to be favored by investors as a stable asset despite real estate challenges and disruptions brought on by the pandemic, according to JLL’s (Chicago) new “Healthcare and Medical Office Perspective.”

The recent report explores key themes impacting U.S. healthcare systems and medical office owners, including labor challenges, payor and reimbursement pressures, elevated costs, and industry disruptions

“Facilities offer both risks and opportunities to healthcare providers, and, despite the challenges, the critical nature of healthcare and large tailwinds from a growing and aging population continue to make healthcare real estate one of the most stable asset classes for investors,” Jay Johnson, National Practice Leader, Healthcare Markets, JLL, said in a press release.

Specifically, medical office occupancy is relatively stronger than the commercial office sector and was significantly less disrupted by pandemic. Medical office asking rents averaged 2 percent growth year over year for the past five years and reached an average $23 per square foot triple net by mid-year 2022, reports JLL.

Medical office sales reached $9.2 billion in the first half of 2022 after a record performance and investor interest in 2021. JLL anticipates 2022 to close at another record year. The strong demand for healthcare services and the continued shift to outpatient care is expected to assure healthy investor appetite for MOBs.

 

Source: healthcare design

Return Of In-Person Appointments Is Spurring Medical Office Demand In South Florida

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As in-person medical appointments resume, the demand for medical office space for the aging population in South Florida has enhanced.

At the beginning of the pandemic, medical offices weathered the downturn better than traditional offices, but as new COVID-19 variants emerge and appointments continue, there is strong tenant demand.

According to the 2022 U.S. Medical Office National Report, the medical office vacancy rose 80 basis points to 9.5% in 2020, less than a third of the jump that was seen in traditional offices.

Late last year is when availability started to get tighter, benefiting rent growth. The report says the average asking rate national was $22 per square foot, which is up more than 4% since the end of 2019.

In Palm Beach, JLL Capital Markets recently closed the sale of a two-building medical office plaza in Boynton Beach. Although the price of the sale is unknown, the average rental price is $21.50 per square foot.

Woolbright Medical Plaza, located at 1700 and 1800 Woolbright Road, consists of two institutional-grade medical office buildings totaling 33,151 square feet.

JLL represented the seller, TopMed Realty, a private equity firm in Hallandale Beach, in the sale to AW Property Company, a real estate investment, and operating company in Palm Beach Gardens.

A surging population and large concentration of senior citizens in Palm Beach County are driving the demand for health care services. The medical center is adjacent to a 55+ community with 1,800 single-family homes and 500 apartments called Leisureville.

The building is also near Baptist Health Bethesda Hospital East, a 401-bed building and one of the largest health systems in South Florida. JLL Capital Markets closed the sale of the two-building Woolbright Medical Plaza in Boynton Beach.

TopMed rebranded Woolbright Medical Plaza from an office complex to a medical office plaza. It went from 63% to 93% leased. Tenants include physician groups providing radiology and imaging, ENT, primary care, dentistry and physical therapy services.

 

Source: DBR

Q&A Regarding Real Estate’s Fast-Emerging Frontier In Cancer Care And Research & Development

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Thomas Osha has a unique vantage point when it comes to innovation districts rooted in the life sciences. As executive vice president of Wexford Technology + Science out of Baltimore, he runs point for one of the most active U.S. developers of real estate used by major research universities and their private-sector partners.

He recently caught up with Ashley Fahey, The Business Journals’ national real estate editor, to talk about post-pandemic development and how demand is reshaping real estate needs in the realm of cancer-related R&D and treatment.

Below is an edited transcript of their conversation.

Ashley Fahey: Can you talk a little bit about what markets you want to be in?

Thomas Osha: One of the things that we have seen is an acceleration of a move by companies and startups to be near university research. It doesn’t necessarily matter where it is, it matters what it is. So we are seeing areas popping up in Sacramento, Phoenix, Providence, Winston-Salem, Charlotte. A number of cities, Baltimore, St. Louis, that aren’t necessarily considered the major hubs of life sciences, yet at each one of these there are scientists, there is intellectual capital and innovation that companies want to be near.

So it’s starting to branch out to some tertiary and secondary cities, and that’s where you guys are planning your next projects? Very much so. I’ve always said that talent is the currency of innovation.

Ashley Fahey: A lot of cities want to get in on life sciences. What are you seeing at Wexford?

Thomas Osha: I spend a lot of time with local mayors talking about what it is like to create an innovation district. So much of the conversation was around an innovation district being a place where people cluster and connect. It’s not just draw a line and say, “This is the district. You’re in, or you’re out.” In a lot of ways, this is about place making as much as it is about construction of buildings.

 

Click here to read the remainder of the interview.