Investor Interest in Medical Office Buildings Persists

By Jenna Haines
Monday, January 6, 2020

While sales volume from medical office building investments in 2019 appears to be down from previous years, recent data shows that these properties are still highly sought after in today’s real estate market.

Revista, a Maryland-based organization that specializes in healthcare property data, recently reported to the National Real Estate Investor that the medical office building sector’s investment sales volume from the first half of 2019 totaled approximately $4.7 billion.

While the data for the remainder of 2019 has yet to be processed, this number represents a downturn from investment sales volume numbers in 2018, which amounted to $6.5 billion at the end of the second quarter and $12.4 billion at the year’s end. However, sources say this potential dip is likely the result of a slight decrease in “large portfolio transactions” and a reduced number of available properties — not a loss in interest.

“...Appetite remains very strong, especially for high-quality medical office buildings,” Matt Withey, Managing Director of Acquisitions at Virtus Real Estate Capital, a Texas-based real estate firm that does business in the medical office building sector, explains in the National Real Estate Investor. “Investors remain drawn to the durability of the cash flow stream, especially those who think we are in the later stage of the current economic cycle.”