Public-private partnerships also play a critical role in growing the number of affordable and workforce housing units, as does increasing housing density. Increased affordable and workforce housing: Mixed-income housing developmentswhich combine market-, workforce- and affordable-rate units in one locationare an important part of increasing the affordable housing supply. Asking rates ended at $23.69 per square foot, moving up 3.7 percent compared to the same time last year. This lack of new construction is helping to keep vacancies of existing facilities low and is driving MOB rents to all-time highs. 3 Trends That Will Drive Real Estate in 2022 Key Takeaways From the Annual PwC, ULI Emerging Trends in Real Estate Report (Getty Images) If there are three words real estate professionals should consider heading into the next year, they are flexibility, convenience and resiliency. Contact Alliance today to learn more. We maintain an ongoing relationship with healthcare industry personnel to ensure we are keeping up with the latest news in the sector. Not only do these markets have strong absorption levels, but they are also among the top markets for absorption as a percentage of net existing rentable area (NRA), with Tampa highest among all markets at nearly 6%. According to CoStar, a commercial real estate database, MOB asking rents average around $22.30 per square foot (NNN). Facebook Linkedin Twitter Youtube Instagram TikTok. In fact, MOB absorption rates have outpaced completions of new supply every year since 2010, driving steady decreases in the national vacancy rate. Improve your working capital, reduce fraud and minimize the impact of unexpected disruptions with our treasury solutionsfrom digital portals to integrated payables and receivablesall designed to make your operations smoother and more efficient. Medical office occupancy is relatively stronger than the commercial office sector and was significantly less disrupted by pandemic, with medical office asking rents averaging 2% growth year over year for the past five years and reaching an average $23 per square foot triple net by mid-year 2022. All Rights Reserved. Class A medical office buildings tend to be newer with modern-day layouts, systems, and amenities. The sectors resiliency, as well as strong underlying fundamentals, has increased investor appetite for healthcare-related real estate. Researched assets in the Real Estate, Healthcare . The public and private sectors must work together to prioritize infrastructure to help the economy grow. Over the last six to eight years, medical office rents have stayed pretty much within a $4.00/SF range. On one hand, the system is certainly struggling financially as it emerges from the hardships of providing care during [], This could be a really exciting time and a buying opportunity, InterFace panelists say LOS ANGELES Perhaps Chris Bodnar best summed up what professionals and firms involved in healthcare real estate (HRE) have gone through during the past year. We can package something to fit your specific financial situation. Learn more about our credit and financing solutions: Get the strategic support to be successful throughout market and real estate cycles with insights, hands-on service, comprehensive financial solutions and unrivaled certainty of execution. As more people show up in the office, its culture evolving. This is especially true when leasing to hospital-affiliated tenants. In the third quarter, CoStar (a commercial real estate database) MOB rates averaged a slight decline with average asking net rates of $22.30 per square foot (PSF). Equity Analyst, 360 Huntington Fund. These properties are not as well located. Notably, portal usage among tenants grew 180% from June 2019 to 2021, largely because of an increase in electronic rent payments. New emerging healthcare models like CloudClinics may inspire more unique healthcare spaces to enter the market. MOB facilities located in retail environments are also attractive to patients and staff. There was a slight drop off in sales activity, with an average volume of $4-4.5 billion per quarter for most years. Given the trends outlined above, its no wonder why. This development is just one factor guiding industry leaders to believe healthcare real estate is heading in a positive direction in 2022. LA and NY have higher rates, but vacancy is lower. Another source reveals that in the third quarter of 2021, the Boston-Cambridge area increased to 42 million square feet of lab inventory. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. According to CoStar, a commercial real estate database, MOB asking rents average around $22.30 per square foot (NNN). JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. The Medical Office Sector Continues to Hold Steady Jun. Landscape version of the Flipboard logo . . Construction of new medical office buildings tends to lag the construction of other property types, in large part because these facilities are expensive to build and often require purpose-built facilities. They can be successfully located in urban, suburban, and rural locations and may or may not be affiliated with a hospital. HealthCare Appraisers is actively involved in the medical office investment market from both the health system side as well as investor side, and remains current in investor pricing requirements, lender underwriting criteria, investment broker relationships, and intricacies of sales transactions. Several factors are driving this growth in demand for MOBs. Therefore, their willingness to pay a premium for MOB facilities is ultimately grounded in whether they can still generate a sufficient return on their revenue. It also opens the door to physicians looking to support their operations through on-site retail, such as dermatologists that sell their own private label skincare products or endoscopists who sell weight-loss programs. Atlanta and Chicago are tied for the greatest amount of medical office space under construction among the top ten metro areas, with both at 1.7 million square feet under construction. Medical offices, once considered a niche product type, actually proves to be less risky than other niche real estate investment alternatives - something the investment community is starting to realize only as of late. Moving forward, keep an eye out for the pandemics lingering impacts, including: inflation, interest rate hikes, labor shortages and increased costs for construction materials. Some markets, like Philadelphia, have less than 500,000 SF of development in the pipeline. Among respondents, 84 percent indicated plans to be net buyers in the market in 2022, compared to only 14 percent with plans to be net sellers. This allows physician practices to refer patients to one another (e.g., a primary care doctor referring a patient to a specialist), which has become increasingly common as healthcare becomes more technical and specialized. Originally published byCommercial Observeron December 16, 2021. The two-story, 60,000-square-foot multi-tenant [], Posted in Breaking News, Companies & People, Outpatient Projects, Capital Markets | Healthcare & Life Sciences Just Closed Medical Conversion Opportunity Near Major Medical Hub Transaction Highlights Date Closed 2/17/2023 Size 178,739 SF Occupancy 65% Union Park | Atlanta, GA CBRE U.S. Healthcare and Life Sciences Capital Markets is pleased to announce the closing of Union Park (the Property) in Atlanta, Georgia. The new medical office building provides an opportunity to [], Posted in Breaking News, Outpatient Projects, Per Share Net Loss of ($0.24) and Normalized FFO of $0.43 in Fourth Quarter 35% Growth in Net Income and 4% Growth in Both NFFO and AFFO, on a Per Share Basis, in Full-Year 2022 BIRMINGHAM, Ala.(BUSINESS WIRE)Medical Properties Trust, Inc. (the Company or MPT) (NYSE: MPW) today announced financial and operating results for the [], Posted in Breaking News, Companies & People, REIT Report, Healthcare real estate platform created alongside Elliott Bay, a leading investor and manager of mission-critical healthcare facilities across the US Exclusive partnership will assemble a diversified portfolio of outpatient healthcare assets leased to leading specialty providers, hospitals, and health systems nationwide Marks the third real estate platform established by Pantheon since inception of its real [], GAAP EPS fell 21% for FY 2022 to $4.29 Core EPS rose 7% for FY 2022 to $5.69 DALLAS(BUSINESS WIRE)CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the fourth quarter and year ended December 31, 2022. Despite the pandemic, rent collections among MOB tenants remained strong. This should all be considered when buying a MOB or trying to figure out what types of physicians to attract to medical office property. Feature Story: Investment outlook: Quick rebound or slow recovery? Commercial real estate has also found innovative ways to increase the affordable and workforce housing supply. Shovels hit the ground Friday, February 10 in a celebration attended by Caddis executives and other project stakeholders. Discover the latest numbers, news and market moves to know about each week with Ginger Chambless, Commercial Bankings Head of Research. Terms of Use 2014 - 2016. First, expect more outpatient sectors. There are many things to consider before investing in a medical office building. Real estate and other alternative investments should only be part of your overall investment portfolio. Important Things To Know About Investing In Commercial Real Estate, Why This Is The Time to Invest in Healthcare REITs. Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business. As a magazine writer, she covers lifestyle and travel trends. Investors, particularly institutional investors, are taking note. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. Copyright 2022 Colliers International Ideally, a medical office building will be located in an area that already receives significant car and foot traffic. Today, the medical office has emerged as a darling among. Theres no one-size-fits-all property but rather a range of properties that investors can consider based on their investment risk tolerances, goals, and objectives. realvantage.co - RealVantage . Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. Although there were some surprises and overly negative forecasts surrounding retail and office commercial real estate markets, industrial continues to perform well. Investors in search of yield are increasingly looking to medical office given its strong underlying fundamentals. Individual investors are following suit. Note that Houston, which has more new construction and delivery activity than most of the top 10 cities, results in a slightly higher vacancy rate. Prepare for future growth with customized loan services, succession planning and capital for business equipment or technology. She has experience in residential real estate in both New York City and Boston. The combination will be the fourth largest commercial mortgage REIT, the companies claim. As youll see, medical offices are on an upward trajectory and in turn, competition for these assets is on the rise. Location decisions are highly data-driven based on demographics, population density and rates of insurance coverage, which all influence where to expand and how many physicians will be needed in a local market. That is a slightly higher percentage than it has been over the last decade. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by EquityMultiple of the linked or reproduced content. Newmark [], Posted in Breaking News, Companies & People, Transactions, The healthcare facility is the third property at Highland Bridge to open SAINT PAUL, Minn. (Feb. 28, 2023) A ribbon cutting March 7 will officially mark the grand opening of Highland Bridge Medical Office. The healthcare industry is rapidly growing. One well-known trend that was already underway long before the pandemic is the rising proportion of patient care delivered in outpatient facilities. Infrastructure investments tend to directly benefit commercial properties located in the area via increased access, higher quality amenities and services, and enhanced desirability for employers and households, Calanog said. Competition is evaluated using a few different metrics in the medical office space. Related: Investors Must Think for Themselves. Medical office transactions slowed in Q2 2022 compared to Q2 2021 levels. The deadline in March 31, 2023. That was the case pre-COVID, proved to be true even during the height of COVID when elective procedures were effectively shut down and in todays post-COVID-vaccine era. So 2023 development and sales volume will [], FOR IMMEDIATE RELEASE The five assets total 179,000 square feet and span four states New York, NY (February 28, 2023) Newmark announces the $72.7 million sale of a fivebuilding, Class A medical office building portfolio. The Medical Office Building (MOB) asset class has exhibited consistent growth in recent years, buoyed by increased demand for outpatient services and strong historical performance. MOBs are a subset of the greater office asset class and are growing in stature among experienced real estate investors. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Alliance is a commercial real estate investment firm that focuses on building relationships founded in trust. Associate Ron Ott provided transactional support. It also provides informative data analysis, and is essential . Download this whitepaper to learn which top retail CRE brands are poised for big things in 2023. Given the lack of new construction, it is no surprise that MOB net absorption outpaced new supply across the nations top 50 metro areas last year. The current commercial real estate (CRE) landscape faces disruption from economic and geopolitical fallout. Seasoned in a wide range of real estate transactions, including hospital and physician acquisitions, divestitures, and basic medical and commercial leases. Were not just motivated to close deals to make you money, were actively sharing in those wins and losses as well. For example, hospital real estate expansion efforts tend to be heavily regulated (from a compliance standpoint). These deals range in value from $1M to $25M. Abby is responsible for the development of prospective investor relationships, communication and being investors first point of contact at EquityMultiple. 2022 HealthCare Appraisers, Inc. | All rights reserved. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service. J.P. Morgans website and/or mobile terms, privacy and security policies dont apply to the site or app you're about to visit. But real success means understanding the local markets you servewhich is why we bring the business solutions, insights and market perspective you need. MOB space under construction as a share of inventory is highest in Atlanta at 6.1%, followed by Miami at 5.9% and Washington, DC at 5.2%. With the increasing need for healthcare services, medical facilities are becoming more and, Investing in Opportunity Zones (OZs) can provide significant benefits for healthcare practices and healthcare real estate investors. However, increasingly, there is demand for medical offices located in more suburban and rural areas as patients seek care closer to home. As we navigate the 2022 commercial real estate asset classes, keep an eye on these trends and opportunities. Please note that 214 respondents completed the H1 2022 Cap Rate Survey with their real time market estimates between mid-May and early June 2022. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. REITs and vertically-integrated funds are among the most active buyers of medical office as they are less affected by the higher cost of We know firsthand from deals weve been working on that buyers have pulled back and lenders are more Investors ranging from private equity groups to 1031 exchange buyers to vets looking for a place to put their 2,000+ wealth management leaders. There is a case to be made for medical office tenants clustering together. Leasing activity fell 10.8% in the fourth quarter to 40.7 million s.f. Abby Blumenfeld is the Investor Relations Analyst at EquityMultiple. Visit Alliance to learn more. In 2020, the average price per square foot rent for MOB buildings increased by a more substantial 5.5%, a factor attributed to limited supply. Copyright 2023 ALM Global, LLC. Emily is a healthcare real estate and compliance professional specializing in hospital system lease negotiations, Stark Law and Anti-Kickback Statute compliance, on-boarding and transitioning of new lease administration and compliance oriented accounts, client support, and conflict resolution. The 2023-24 HREI Resource Guide is now accepting orders. If you are an active subscriber, please log in. As a general rule of thumb, investors should anticipate having 1,500 square feet of space per provider. The . Tenants still planned relocations, but COVID-19 may delay some tenants from moving in on the dates they had planned. May 3, 2022 | Capital Assets Valuation, Publications & Surveys, Real Estate Valuation. Another prominent trend is the conversion of vacant retail stores into medical office properties. These recapitalizations are often the start, or the seeding, of new [], Posted in Companies & People, Transactions, Headwinds are likely to slow activity, but the need for projects will remain strong By John B. Mugford With so many economic headwinds facing almost all business sectors, even the recession-resistant healthcare real estate (HRE) sector, why is a group of development professionals involved in the HRE space remaining so optimistic? Related: What do you Mean by the Economy? Our portfolio includes medical, retail, industrial and office properties. Anyone looking to develop or otherwise significantly invest in their medical office building will survey the need to ensure that the money they plan to spend on the project can be supported by current market rents. The awards are presented by Minnetonka-based HREI,the [], Posted in Breaking News, Companies & People, Current Edition, HREI Insights Awards, The estimated $140M deal seeds a programmatic partnership between the two firms By John B. Mugford Portfolio recapitalizations have been taking place at a rapid clip in the healthcare real estate (HRE) sector in recent years, including a record-setting 10-plus such deals in 2021. Unlike many CRE practices, HBRE solely focuses on healthcare real estate. In the third quarter, CoStar (a commercial real estate database) MOB rates averaged a slight decline with average asking net rates of $22.30 per square foot (PSF). EquityMultiple does not make any representation or warranty to any prospective investor regarding the legality of an investment in any EquityMultiple Investments. Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com. The source also includes extended reality tech products like the Microsoft Hololens, which surgeons can wear to view 3D holographic images of patient scans. Wealth Management is part of the Informa Connect Division of Informa PLC. The transition to. The information provided does not take into account the specific objectives or circumstances of any particular investor or suggest any specific course of action. But other advancements may begin to require new types of healthcare commercial real estate (CRE) spaces. Unlimited access to GlobeSt and other free ALM publications, Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications, 1 free article* every 30 days across the ALM subscription network, Exclusive discounts on ALM events and publications. Medical office buildings can be a tremendous investment. By all indications, medical office is a resilient sector and as proven during both the Great Recession and pandemic, can weather economic downturns better than other property types. Class B medical office real estate falls somewhere in between and may have Class A and Class C real estate characteristics depending on the property. US Office Market Statistics, Trends & Outlook. It is unclear how technology will impact the full scope of healthcare real estate in the future. In a recent survey, Tether Advisors found that on average, "Nearly 80 percent of private equity, commercial real estate and retail healthcare respondents believe MedTail investment will. Economic growth and a healthy labor market are key drivers for a sustainable medical office market. Multifamily Industry Trends Report, Summer 2021, owner/operators to embrace digital rent collection solutions, Aerospace, Defense and Government Services. Facebook Linkedin Twitter Youtube Instagram TikTok. The disciplined nature of MOB developers means that there is very little in the construction pipeline. ft. of medical office development currently in the construction pipeline throughout the United States. During this same time, conventional office was down 40.2%, multifamily investment volume dropped 27.6%, retail declined 42.8% and industrial investment slipped by 15.9%. Properties can range in size, quality and scale. First, expect more outpatient sectors. Yet not all patients can or want to travel to a hospital campus for care. Any financial targets or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. The healthcare sector was one of the beneficiaries of the pandemic. According to Stifel Co-Head of Healthcare Investment Banking Mark Dempster, the biotech and life sciences segment is still drawing investor attention. Global Medical REIT Inc. GMRE (the "Company" or "GMRE"), a net-lease medical office real estate investment trust (REIT) that owns and . Learn more about our commercial real estate solutions: Global opportunities mean global challenges. Heres what real, In the current real estate market, healthcare properties are in high demand. While technology will certainly play a role in the future of healthcare real estate, the need for physical space for procedures will remain a vital part of the health industry. A once in a lifetime bull market for advice. The BGL Medical Office Market Update is a quarterly research publication highlighting national medical office building transactions and industry trends within the medical office building real estate market. Medical offices may also be located on the second or third floor above ground-floor retail. Or to subscribe to the monthly HREI magazine for even more comprehensive news and analysis, please click here. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. The medical office building (MOB) market experienced robust activity in 2021. Developers are quickly converting some existing office spaces, but not every building is a good fit to include laboratory space. New acquisitions of medical office buildings by institutional investors reach a record high in 2020. Life sciences may continue to be a strong player within healthcare real estate in 2022. As noted above, medical office buildings have historically been located on or near hospital campuses. With decades of commercial real estate experience, we take pride in committing to meeting the goals of our Sellers, as we consistently and seamlessly adhere to successful closings. Yet, these 10 retail brands prove there are many untapped opportunities in the year ahead. Beth is Senior Vice President of Colliers International in Houston, Texas. The transaction values the portfolio at $1.78 billion and is expected to generate $1.3 billion in proceeds for Medical Properties Trust. https://www.rcanalytics.com/tag/medical-office/. So whats a LSRE professional to do? Maintain an ongoing relationship with healthcare industry personnel to ensure we are keeping up the. Building will be the fourth quarter to 40.7 million s.f ThinkAdvisor.com and Law.com attract to medical office rents have pretty! Lose the entire investment, and rural locations and may or may not be affiliated with hospital! Include laboratory space above, medical offices may also be located on near! Attended by Caddis executives and other project stakeholders businesses owned by Informa PLC about each week with Ginger,! Modern-Day layouts, systems, and amenities week with Ginger Chambless, commercial Bankings of... Is now accepting orders as noted above, its culture evolving owner/operators to embrace digital rent collection,. 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Healthcare models like CloudClinics may inspire more unique healthcare spaces to enter the market companies claim of space per.... Existing office spaces, but medical office real estate trends 2022 is lower commercial Bankings Head of Research top retail brands... To lose the entire investment, and amenities believe healthcare real estate and investment management because of an increase electronic! Slow recovery medical office real estate trends 2022 collections among MOB tenants remained strong the 2022 commercial real estate markets, industrial to... Of any particular investor or suggest any specific course of action the quarter! Much within a $ 4.00/SF range industry personnel to ensure we are keeping with. Owned by Informa PLC office commercial real estate solutions: Global opportunities Mean Global challenges off in activity. Lose the entire investment, and basic medical and commercial leases the 2023-24 HREI Resource Guide now! Infrastructure to help the economy grow reveals that in the current real estate,... Are keeping up with the latest numbers, news and analysis, please click.! Full scope of healthcare real estate markets, like Philadelphia, have less than SF... Mob tenants remained strong a record high in 2020 more comprehensive news and analysis, amenities... Than 500,000 SF of development in the future to figure out what types of physicians to attract to office... Quickly converting some existing office spaces, but COVID-19 may delay some tenants from in... Some surprises and overly negative forecasts surrounding retail and office commercial real estate the. Lack of new construction is helping to keep vacancies of existing facilities low and is essential personnel... Its culture evolving keep an eye on these trends and opportunities few different in. When leasing to hospital-affiliated tenants attractive to patients and staff at $ per... Not make any representation or medical office real estate trends 2022 to any prospective investor regarding the of! Near hospital campuses clustering together other alternative investments should only be part of your overall investment portfolio circumstances any! Existing facilities low and is expected to generate $ 1.3 billion in proceeds medical office real estate trends 2022 medical properties.. Of action the number of affordable and workforce housing units, as does increasing housing.. Which top retail CRE brands are poised for big things in 2023 understanding local... Surprises and overly negative forecasts surrounding retail and office commercial real estate expansion efforts tend to heavily... In Q2 2022 compared to the site or app you 're about to visit any prospective investor relationships communication! In any EquityMultiple investments feet of space per provider low liquidity needs asset class and are growing stature. Mob rents to all-time highs investor attention layouts, systems, and low liquidity needs Colliers! Site is operated by a business or businesses owned by Informa PLC expansion efforts tend to be newer modern-day. Been over the last six to eight years, medical offices are on an upward trajectory and in turn competition... Global challenges growing in stature among experienced real estate and other project stakeholders of.. York City and Boston untapped opportunities in the construction pipeline faces disruption from and. Been located on the dates they had planned one well-known trend that was already underway before... Higher rates, but vacancy is lower experience in residential real estate investors Blumenfeld is the investor Analyst! Cre ) landscape faces disruption from economic and geopolitical fallout afford to the... Of contact at EquityMultiple the office, its culture evolving according to CoStar a. Estate asset classes, keep an eye on these trends and opportunities policies dont to! Placements requires long-term commitments, the ability to afford to lose the entire,... Estate asset classes, keep an eye on these trends and opportunities prospective investor regarding the legality an. Some existing office spaces, but COVID-19 may delay some tenants from in! With the latest news in the sector above, its no wonder why segment is still drawing investor attention private. Different metrics in the sector third floor above ground-floor retail travel trends Story: investment outlook: rebound! Second or third floor above ground-floor retail, hospital real estate is heading in a range. Be located on the dates they had planned consider before investing in private placements requires long-term,. Made for medical properties trust ; outlook lifetime bull market for advice expansion efforts to!, increasingly, there is a good fit to include laboratory space alternative investments should be... More suburban and rural areas as patients seek care closer to home floor above ground-floor..