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Nothing But Good News Abounds In The Healthcare Real Estate Sector

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At a time when U.S. and international headlines have been full of bad news, there seems to be nothing but good news to report about the healthcare real estate (HRE) space.

To start with, medical office building (MOB) sales in 2021 – despite the lingering of the COVID-19 pandemic – broke the all-time record for volume at $17.4 billion, topping the previous record of $15.4 billion set in 2015.

In addition, occupancy rates increased significantly last year, absorption of MOB space is as strong as ever, MOB construction starts are on the rise, and third-party owned MOB projects made up a larger share of projects than any of the previous seven years.

This data and more was presented during a session at last week’s Revista Medical Real Estate Investment Forum 2022, which was held at the Loews Coronado Bay Resort from March 2-4. The annual event is put on by Arnold, Md.-based Revista, which gathers a wide range of HRE data for its subscribers.

Kicking off the agenda on the second day of the conference, March 3, Revista Principals Mike Hargrave and Hilda Martin provided the audience with a wide variety of data from 2021 during a session titled “Medical Real Estate Trends & Top Markets.”

 

Source: HREI

2021 To Break Medical Office Building Sales Record

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Total medical office building (MOB) sales volume last year is likely to surpass $16 billion, breaking the previous record of $15.6 billion, set in 2015.

Final medical office building (MOB) sales for 2021 are still being tabulated, but preliminary data from Revista suggests that last year’s total volume will surpass $16 billon, breaking the previous record of $15.6 billion in MOB sales recorded in 2015. (IMAGE CREDIT: Revista)

That’s according to Arnold, Md.-based Revista, a healthcare real estate (HRE) data firm that shared its preliminary 2021 findings during its Fourth Quarter (4Q) 2021 Subscriber Webcast Jan. 25.

As of late January, Revista Principal Elisa Infante Freeman told listeners, the MOB sales volume for 2021 stood at $15.3 billion. However, that figure was based on preliminary data, meaning Revista had not yet gathered or compiled all of the transactions that took place late in the year.

“My guess is, by the time we release final stats in March, we’ll be at (a record MOB volume for 2021),” Ms. Freeman said during the webcast, adding that the firm will provide more detailed data during its upcoming “2022 Medical Real Estate Investment Forum,” which will be held in Coronado, Calif., outside of San Diego, March 2-4.

Regardless of the final tally, last year’s record-setting level of MOB sales activity also blew away the total for 2020 – which wasn’t a bad year, either. Despite the COVID-19 pandemic, the 2020 total came in at $11.7 million, keeping intact a streak of seven straight years (now eight) with the annual volume topping $11 billion.

The relatively strong sales volume in 2020, followed by an increase of more than 30 percent in 2021, add to the growing heap of evidence that MOBs are a crisis-resistant, safe harbor investment that can withstand difficult times, including recessions and pandemics. It’s a thesis that veteran MOB investors have embraced for many years, and one that has more recently attracted many new entrants to the space.

 

Source: HREI

MOB Sales Come On Strong In Third Quarter 2021 With $4.6 Billion In Trading

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As Revista’s third quarter webcast came to a close on Oct. 21, Mike Hargrave, one of the firm’s principals, summed up the information the healthcare real estate data firm had presented that day.

“The overall theme of this webcast is that medical office buildings and healthcare real estate had a very strong quarter,” Hargrave said, adding that the strong quarter was “representative of the current overall state of the sector.”

Indeed, Q3 was a strong quarter for MOBs, highlighted by the fact that sales came in at $4.6 billion, the second highest quarterly total – behind the $4.9 billion of sales in Q2 2017 — since Revista began tracking such data in 2015.

That strong Q3 puts year-to-date MOB sales for 2021 at $9.6 billion, all but assuring that the sector will reach seven straight years of topping $10 billion in sales — a benchmark indicating that the sector is one of the most desirable asset classes among investors of all types.

“In addition to strong sales during the third quarter, MOB sales on a trailing 12-month (TTM) basis, at $13.7 billion, was the highest we’ve seen in several years,” Hargrave added.

 

Source: HREI