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HealthCare Appraisers, Inc. (“HAI”) is pleased to present its inaugural Medical Office Fundamentals Report. In compiling this report, HAI communicated with lenders, real estate brokers, investment bankers and various other investors of medical office product, asking questions on subjects such as industry drivers, financial markets, capitalization rates, internal rates of return (IRR), as well as current trends and overall market conditions.
Overall, our findings indicate that the national medical office market has remained robust over the last 12 months, with most respondents indicating that demand drivers for medical office pricing continues to remain favorable. A low interest rate environment (but moving higher), coupled with strong physician and health system fundamentals, continue to be the driving forces behind sustained strong pricing levels.
As the medical office product has moved from niche status to a favored asset class, a common theme amongst investors is the general lack of available, good-quality product, which continues to drive strong pricing for institutional-quality assets that come to market. Given the substantial size of the larger REITs, and the inability to move the investment needle with one-off, smaller asset acquisitions, the larger players are seeking to grow via the M&A route, or through joint venture partnerships with operating entities. 2017 and the first half of 2018 witnessed numerous portfolio sales.
This survey looks to explore and illustrate various real-estate related highlights for medical office product, including: timeshare usage, rental rates, development trends, product type, and pricing parameters.
CONSULT A MOB EXPERT
If you are considering a transaction with a medical office building, it is important to consult a healthcare valuation expert to provide you with the most accurate fair market value appraisal based on tried and tested best practices, and thorough diligence on market factors. Additionally, if you would like to learn about some of the common valuation pitfalls as it pertains to MOBs: CLICK HERE