Commercial Real Estate Finance

Posts Tagged ‘VTR’

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 »