Investor demand for healthcare related real estate is expected to remain strong in 2012, according to members of the healthcare practice group at Jones Lang LaSalle.
The real estate services firm anticipates increased medical office building and outpatient development by health systems, driven by the systems' efforts to further align with physicians and increase capacity for outpatient services. Notably, though, these facilities will trend away from single-specialty offices to larger, comprehensive outpatient facilities.
The firm also expects increased demand for healthcare facilities from Real Estate Investment Trusts. "While no asset class can be considered recession-proof," said Mindy Berman, managing director of healthcare capital markets at Jones Lang LaSalle. "Based on past performance and future projections, healthcare real estate is about as 'recession-resistant' as possible which makes it a preferred class today."
Merger and acquisition activity in the sector is also expected to drive healthcare real estate activity. "As systems look to portfolio realignment to make the best use of their real estate assets, we will see strong levels of activity in the areas of dispositions, monetizations and sale-leasebacks," said Ms. Berman. "Fortunately, there continues to be strong investor demand for healthcare related real estate, and we expect the product sector to remain much in demand in 2012 as the broader economy continues to struggle to re-energize itself. The proven track record of healthcare real estate through downturns and the compelling demographics of the sector will keep propelling activity and pricing levels throughout 2012."
However, health systems with reimbursement troubles and lack of access to capital will continue to be challenged by physical plant deterioration, according to Scot Latimer, managing director, of Jones Lang LaSalle's strategic planning capabilities. Average age of plant for healthcare facilities has risen nationally all but one year in the last decade, and many healthcare systems have deferred upgrades, which could inhibit future operations.
Jones Lang LaSalle: Healthcare Real Estate Will Pick Up
The real estate services firm anticipates increased medical office building and outpatient development by health systems, driven by the systems' efforts to further align with physicians and increase capacity for outpatient services. Notably, though, these facilities will trend away from single-specialty offices to larger, comprehensive outpatient facilities.
The firm also expects increased demand for healthcare facilities from Real Estate Investment Trusts. "While no asset class can be considered recession-proof," said Mindy Berman, managing director of healthcare capital markets at Jones Lang LaSalle. "Based on past performance and future projections, healthcare real estate is about as 'recession-resistant' as possible which makes it a preferred class today."
Merger and acquisition activity in the sector is also expected to drive healthcare real estate activity. "As systems look to portfolio realignment to make the best use of their real estate assets, we will see strong levels of activity in the areas of dispositions, monetizations and sale-leasebacks," said Ms. Berman. "Fortunately, there continues to be strong investor demand for healthcare related real estate, and we expect the product sector to remain much in demand in 2012 as the broader economy continues to struggle to re-energize itself. The proven track record of healthcare real estate through downturns and the compelling demographics of the sector will keep propelling activity and pricing levels throughout 2012."
However, health systems with reimbursement troubles and lack of access to capital will continue to be challenged by physical plant deterioration, according to Scot Latimer, managing director, of Jones Lang LaSalle's strategic planning capabilities. Average age of plant for healthcare facilities has risen nationally all but one year in the last decade, and many healthcare systems have deferred upgrades, which could inhibit future operations.
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