Demand for Medical Office Spaces on the Rise in the US

Posted on 2018-11-13
Demand for Medical Office Spaces on the Rise in the US

While the absorption rate of office spaces is slowing down, the absorption rate for healthcare sector office spaces has increased drastically. The vacancy rate has shown a similar trend when comparing the medical office buildings and the overall office market, though construction of new healthcare facilities and buildings has not increased much, many investors are looking towards medical real estate for better yields because of the continued demand for healthcare facilities.

What are the reasons behind the rise in the medical office buildings?

Increase in Aging Population

As more and more baby boomers continue to retire, there is a growing market for healthcare facilities and care centers throughout the US. This is one of the foremost reasons for the increased demand in medical spaces in the US. The backlash of such a growth pattern is the steep difference that will crop up between supply and demand. According to market experts, the demand for medical office spaces will soon outgrow supply.

Another consequence of the aging population will be the demand for more healthcare personnel and real estate to house the same. According to the US Bureau of Labor Statistics, healthcare employment has grown faster than any other field.

The Changing Healthcare Industry

With new and improved medical technologies being developed every day, patients are looking for similar improvements in their healthcare facilities. This has propelled owners to shift to properties that can either adapt to changing medical technologies or have enough space to house them in the future.

Another factor is the evolution of telemedicine and digital technology in healthcare. This has brought down costs of medical solutions and given patients access to medical technologies in places they were unavailable before. It has also driven the market for medical spaces in neighborhoods with higher patient population and buildings that come equipped with specialized services

Additionally, with retail users shrinking their footprint, medical users are taking up what were formerly retail spaces at significantly fewer rentals than traditional medical office buildings.

Reduced ROI from traditional properties

Yield from traditional assets has decreased significantly. Therefore, investors are looking at medical office spaces to ensure stability in the case of global markets showing a slowdown.  Foreign investment too is flowing into the healthcare office sector for this very same reason. Due to saturation in absorption and yield in traditional property types, medical offices have sprung up as a lucrative investment option. Medical offices also tend to have long-term leases nowadays with reduced tenant turnover, making such investments highly profitable.

While the demand for medical office spaces sure has great potential for investors, it also calls upon government officials, real estate experts, lawmakers and other prominent members of the society to envision a future where the changing demographics are provided the right care.

Commercial Real Estate Services, Real Estate Services.
Share on :

By continuing to browse or by clicking “Accept All Cookies,” you agree to the storing of first and third-party cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. For more information, please read our Cookie Policy