The coexistence of healthcare and real estate is a complex dynamic that requires both parties to focus on value-add opportunities that deliver efficiency, enhance patient outcomes, and support long-term growth. The COVID-19 pandemic has served as a timely reminder that healthcare organizations and investors need to apply the same level of analytical rigor to their real estate as they do to other parts of their business.
Hospital and healthcare system leaders are reexamining their real estate footprint and organizational structure. As they do so, many are leveraging real estate to achieve financial and operational benefits – including increased access to patients, cost containment and improved community wellbeing.
Despite the challenges and headwinds posed by current macroeconomic conditions, the demand for healthcare-related real estate remains strong. Demand for medical office buildings, freestanding medical facilities and ambulatory centers continues to rise across the country. Additionally, the trend toward retail-like environments is gaining momentum as hospitals seek to provide services in ways that are more convenient for their patients.
Inflation and rising interest rates can increase borrowing costs and may lead to a slowdown in new development projects. In addition, the growing number of pre-leased properties is making it more difficult for developers to obtain financing. As a result, lending activity has shifted to larger national banks who have more experience in the healthcare sector and can manage the additional risk of higher loan-to-value ratios. These trends can potentially exacerbate the impact of rising inflation on healthcare property values and reduce overall investor returns. healthcare and real estate