Commercial Real Estate Finance

Posts Tagged ‘MOB’

And when I say MOB, I’m talking about Medical Office Buildings. It’s an acronym.

This blog has no affiliation with the mob.

Let me start over. The idea for this post came from a great CoStar Group article published last month. In it, Randyl Drummer points out the uptick in medical office deals that’s resulted from changes in medical care, technology, demographics, and healthcare regulation (i.e., the Affordable Care Act).

Mr. Drummer explains,

Continued health-care employment growth, combined with the expected increase in demand for medical crae [sic] services from the aging population is expected to continue to drive development of medical ambulatory care facilities, including MOBs, surgery centers, urgent care clinics and diagnostic lab facilities.

The healthcare industry is the largest job creator in the country, and one of the largest drivers of economic activity in cities big and small. Healthcare, of course, is also extremely complicated, affected by large private interests, government agencies, and ever-changing rules. The fact that investors and developers are pursuing opportunities in the highly regulated healthcare sector–despite the layers of bureaucracy that often make medical establishments onerous for business interests–shows a great deal of confidence in the sector’s overall growth.

There’s no denying the demand for healthcare real estate. This is a product of both an aging population and increased availability of medical coverage (courtesy of Obamacare). But the additional capital demands this will create (for insurance companies, the government, employers, and individuals) will also result in greater demand for less expensive medical options. This is why the MOB–Goodfellas connotations aside–seems an especially promising niche in the healthcare real estate sector. Read the rest of this entry »

Medical Office Buildings, commonly referred to as MOBs, are one of the few darlings of the current real estate finance industry.  They garner low rates, great terms, and even bankers’ whose commercial loan portfolios took a drubbing want to lend in that space. Need proof? I was at lunch with a banker a couple weeks ago who said that they simply were not doing any construction lending of any kind, period.  When I followed up that comment asking him about medical office buildings, his response was “Oh, well, yeah.  We’d definitely make an exception there.”

While many real estate insiders expected a slow down of the medical office frenzy once Scott Brown’s surprise victory in taking Ted Kennedy’s vacant Senate seat potentially swayed the fate of the healthcare reform bill, it has simply delayed the inevitable.  The popular belief was that the future growth of the sector was going to be fueled only by the 30 million plus currently uninsured people the healthcare reform bill would have added to the system.  But when you figure demand will generate supply, you better make sure to look at the whole picture. Read the rest of this entry »