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2017 Health Care Marketplace Report
2017 Health Care Marketplace Report
2017 Health Care Marketplace Report
Research Report
2017 HEALTH CARE MARKETPLACE
Medical Office
Medical Office Sales
Sales VolumeVolume
25 12.0
24 10.0
23
8.0
22
21 $B 6.0
20 4.0
19
2.0
0.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Volume Historic Average
Source: Real
Sources: RealCapital Analytics
Capital Analycs
350.00
3 300.00 U.S. Research Report | 2017 Health Care Marketplace | Colliers International
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Medical Office: Recent & Forecast Completions Mid-Atlantic Midwest Northeast Southeast Southwest West
20
Medical Office: Cap Rates - United States
Within the current MOB investment framework, there are marked
15
differences in terms of quality, occupancy and location. The
2017 Outlook: Initially Cloudy but
9.0%
western region of the U.S. remains ahead of the pack with an
10
Clearer Skies Ahead
8.5%
average sale price of $329 per square foot$90 per square foot
There can be no doubt that the repeal of the ACA and the
8.0%
above
5 the national average. Seattle and Los Angeles saw the most
uncertainty around what lies ahead will cast a shadow over the
7.5%
MOB investment activity among major U.S. cities in 2016 with a
0 health care sector for some time. In spite of this, health care
combined total of $1.1 billion
2014 2015 in transactions
2016 across 2017
82 properties. 7.0%
real estate fundamentals remain solid and the scale of consumer
Along with New York, these two
Completions (MSF)markets
Value also
($B) saw trades in excess
6.5%
demand for health care services should continue to increase thanks
of $1,000 per square foot, with several around $1,500 per square
Sources: Revista to the countrys aging population. The stability this provides will
6.0%
foot and one above $1,750 per square foot. Cap rates for well- 2002 2003to2004 2005 2006 2007 2008 2009 2010in2011 2012 care
2013 2014
continue garner investor interest health real2015 2016
estate.
located and fully-leased prime assets remain compressed at around
Cap Rate
4.5% in these markets with high barriers to entrya substantial Setting aside speculation on the ACA, there are several other
premium over national averages. Sources: Real Capital Analycs
regulatory and market changes that we expect to affect health care
MedicalOffice
Medical Office: Cap
CapRates by Region
Rates by Region real estate in 2017 and beyond.
Medical Office Sales Volume
150.00
> Consumers Take on More Financial Responsibility
for Health Care
100.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Beyond the government-sponsored changes to reduce costs,
Mid-Atlantic Midwest Northeast Southeast Southwest West employers continue to drive down their costs by shifting more
Source:Sources:
Real Capital Analytics
Real Capital Analycs
financial responsibility for health care benefits to employees.
The continued expansion of high-deductible health plans is also
Investor composition only shifted at the margins in 2016. Private causing individuals to take on more of the costs for their care.
Medical Office: Cap Rates - United States
investors accounted for the largest share of transactions by value
9.0%
(41%) but this is down from 47% in 2015, making this group net dis- This shift is making health care purchases a more consumer-
investors.
8.5% REITS and listed real estate companies were the primary driven decision based on cost, quality and convenience. A recent
net investors, accounting for 29% of transactions by value in 2016 study by The Advisory Board Company showed that primary
8.0%
compared to 26% the prior year. Institutions held steady at around care customers prioritize convenience over the credentials of
7.5% their provider or continuity in seeing the same provider. The
15% while cross-border investment rose from 3% to 6%. Chinese
investors
7.0% dominated the latter group, accounting for more than 50% same study showed that short travel distance was the most-cited
of cross-border
6.5% acquisitions by value. consideration when choosing a specialist.
6.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Cap Rate