Healthcare real estate

Children’s Rehabilitation Center in White Plains, NY located within soon-to-be largest Senior Living Campus in the USA. Operated by Noyack Medical Partners
The landmark Williamsburg Savings Building, renovated with 200 high-end residences and medical offices. Brooklyn, NY Operated by Noyack Medical Partners
The St. Vincent Heart Center of Indiana operated by Bremner & Wiley

Healthcare real estate is a niche market within the larger real estate market. Healthcare real estate or "Medical real estate" describes buildings, offices, and campuses leased to members or organizations within the healthcare community. These buildings can be owned by hospitals, health systems or through private or public third party groups. There is a rising trend among hospitals, health care systems, and medical practitioners to embrace third party ownership and management of real estate. By using third party developers they can preserve their capital resources for acute care needs and focus their attention on helping people, while passing on responsibility of building regulation and maintenance minutiae.

Healthcare facilities have detailed technological and regulatory requirements. Even such building maintenance tasks as cleaning, heating, and cooling are done differently in health care, with demanding sterilization and filtration needs. In addition to outsourcing building and management tasks, it's becoming increasingly attractive for hospitals to leave building ownership itself to someone else. The concept fits well with the current development trend pairing not-for-profit hospitals with for-profit physician groups as partners in new specialty facilities, such as The Heart Center of Indiana.[1] Illinois, Texas, California, and Florida accounted for a third of healthcare construction starts in 2007, though the practice of third party ownership is also rising among all metropolitan areas where space is at a premium.[2][3]

From an investor viewpoint, healthcare REITs as a group generally trade at a premium yield to other REIT categories. It is also considered one of the more stable sectors, along with higher education and government.[4] During times of economic decline, health care real estate continues to grow.[5][6][7][8]

In 2008, several factors converged to drive healthcare real estate:

Time are changing though as the 2010 Healthcare Reform Act intended to provide healthcare for 30-32 million people.[11] However, after adjusting for socio-economic variables and population trends, experts say 9 million new patients in the American healthcare system is a more realistic projection. At the same time, the Association of American Medical Colleges now projects the attrition rate of licensed physicians to be greater than 10,000 doctors every year. The problem is that there are more physician retirees leaving the system than new graduates entering. Thus making it even more advantageous to partner with an independent developer.

There have been growth in medical office development through 2015. By the end of 2015, it is estimated that 8.8 million square feet of medical office space will have been developed across the United States. In 2014, 7.1 million square feet was developed across the country.[12]


  1. Kaelble, Steve. "A healthy niche: as Baby Boomers age, Bremner & Wiley stakes out health-care real estate. (Real Estate & Construction)." Indiana Business Magazine. Curtis Magazine Group, Inc. 2003. HighBeam Research. 11 Nov. 2008 <>.
  2. Reed, Vita. "Healthcare Real Estate Set to Benefit from Baby Boomers." Orange County Business Journal. CBJ, L.P. 2008. HighBeam Research. 13 Nov. 2008 <>.
  3. "Real estate firm taps med-building niche - San Antonio Business Journal:." San Antonio Business Journal. 2007. HighBeam Research. 13 Nov. 2008
  5. "PRICE WATERHOUSE RELEASES MAJOR STUDY ON REAL ESTATE'S IMPACT IN THE HEALTH CARE INDUSTRY." PR Newswire. PR Newswire Association LLC. 1996. HighBeam Research. 11 Nov. 2008 <>.
  6. "Expert: Health care, other sectors hold promise for real estate - Houston Business Journal:." Houston Business Journal. 2003. HighBeam Research. 11 Nov. 2008.
  7. "Health care REITs offer prescription for stress in current market; Demand for doctors largely insulates the investment sector.(News)." Investment News. Crain Communications, Inc. 2008. HighBeam Research. 11 Nov. 2008 <>.
  8. "Medical buildings hot as other real estate softens.(SOUTHERN CALIF.)." The Kiplinger California Letter. The Kiplinger Washington Editors, Inc. 2008. HighBeam Research. 13 Nov. 2008
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