Wednesday, March 27, 2013

Capital Hunts For Medical CRE

As healthcare systems evaluate space needs, there's plenty of money out there, according to our panel of experts at last week's Bisnow Healthcare Real Estate Summit. Newmark Grubb Knight Frank's executive managing director Todd Perman says real estate investors are hungry for healthcare properties. But there's not a huge supply to buy. "There's a lot of gunpowder on the sidelines," Todd told our audience in Atlanta. (Maybe they can infill all the old Border's locations and do all their vaccinations in the music section.) Todd says 2013 saw more than $22B in capital raised for MOB and healthcare facility investments.

Bull Realty partner Paul Zeman says we could be on track for $7B in transactions this year, topping $5B last year. And interest for off-campus medical properties is heightening—and shown in cap rates, which are compressing into the low 7% range. And with rental rates increases this year, Paul says, "I think everything is trending in the right direction."

Rendina Cos's EVP Todd Varney says with the cost of capital still low, he sees more hospitals and healthcare system reevaluating development projects, especially off-campus, that were shelved earlier. (Like that book you never had time to read, but now the movie is coming out, so you have to.)