In recent years, experienced commercial brokers have advised real estate investors to invest in healthcare facilities or medical office spaces. This is because they have been rated the most desirable asset. Due to their stability during market swings, excellent occupancy rates, and a positive outlook – timeless and required – medical offices are now declared the most valuable asset category by commercial real estate investors.
Investment Options For Medical Office Buildings Include The Following:
- One way for a typical investor can get into the medical office real estate market is through healthcare real estate investment trusts (REITs). Using a REIT, the investor buys a “share” of the medical office building and receives dividends on the leasing of the asset.
- Another strategy for investment is to use joint ventures or crowdsourcing to buy, construct, or remodel medical office buildings. Several investors might pool their funds to purchase a medical office building through this procedure. Unlike REIT investors, these investors frequently participate more actively in day-to-day operations.
- Without outside aid, high net worth individuals or investment broker teams may decide to buy, construct, or refurbish medical office buildings. Although it carries the most significant risk, this has the highest chance of success. These investors bear the entire financial risk, so they also stand to earn entirely.
The Things Medical Office Buildings Investors Should Know
Here are four considerations for investors who choose to direct their investments in a medical office building:
1. Location, Location, And Location Are The 3 Key Elements Of Medical Office Real Estate
Investment in medical office buildings is mainly influenced by location. Here are some recommendations for choosing a top site for a medical office:
- Businesses near or on significant thoroughfares often perform better than other locations due to the higher traffic volume and improved visibility.
- The property’s location should be in a densely populated region so potential patients can easily access the facility.
- The company’s location needs to be easy for customers to reach and convenient.
- Make sure the chosen area is ideal for reaching the target market. “Sunbelt” states like Florida, California, and Arizona draw families looking for an active lifestyle and retired Baby Boomers. Due to the high need for healthcare in these places, investing in a medical office building there is a wise move.
- Additionally, superior healthcare practitioners are more likely to be drawn to attractive places. High-quality medical facilities are more likely profitable investments and draw in more patients.
2. Questions Relating To The Building’s Size
Another significant consideration when buying an existing medical office building is the size of the structure. Some basic questions to ask about size are
- How many healthcare professionals can the facility accommodate?
- Is enough room available for imaging technologies?
- Exist lab facilities there, or is it possible to add them?
- How many patients can the waiting room comfortably accommodate?
- How many parking spots are available?
The facility’s ability to grow is another concern related to size. The insufficient size of an existing medical office building could be fixed by expanding it. Future service growth plans might require constructing an additional facility or adding to the current one. Purchasing a home with growth potential gives you options for future development.
Types of Medical Office Buildings
3. Is The Design Of The Medical Building Updated Or Outdated?
A few decades ago, many investors decided it advantageous to purchase cheap old homes and turn them into medical office buildings. However, medical office buildings must be technologically cutting-edge due to changes in healthcare technology requirements. The commercial real estate market is being revolutionized by intelligent buildings today, and the healthcare sector is no exception.
Modern medical office buildings are more specialized and digital compared to earlier times. Medical facilities need to find ways to cut expenditures on expenses like power and other utilities in addition to advancements and an increased reliance on technology. Due to this need, healthcare buildings have become “greener” thanks to features like LEED certification and incredibly efficient HVAC systems.
Additionally, intelligent buildings are assisting these companies in cost reduction. For instance, automated systems can drastically lower the cost of heating and cooling. These technologies can also cut down on expensive repairs.
To bring an old building up to code and make it compatible with modern communications, medical, and other technologies may require significant expenditure. When it comes to medical facilities, new isn’t always better, but the physical setting needs to be compatible with modern healthcare technologies.
4. Medical Office Structures’ Strength And Adaptability
Technology is constantly evolving. Buildings for medical offices must be flexible to succeed. Because the delivery of modern healthcare is continually changing, institutions that support these changes are most suitable for practitioners. A medical office building must have several types of flexibility, including:
- Sizes of exam and procedure rooms that are universal and can be used for a variety of purposes.
- Traditional planning is the basis of modular design, which may also employ prefabricated construction techniques.
- Reproducible planning techniques that you may apply at many growth scales.
- Utilizing technology to help healthcare professionals serve patients virtually.
Purchasing A Medical Office Building Is A Wise Investment Choice
It is well known that most restaurants only remain open for one year or less, while e-commerce sales are what keep retail establishments open. However, Americans will always require healthcare, and this need will only increase with time. Buying medical office buildings is viewed by many commercial investors as not just the safest, most profitable, and most secure medical condo investment.
Why Is Making A Financial Investment In A Medical Office Building A Wise Move?
- Longer leases from medical tenants than from other commercial tenants typically result in a consistent cash flow for investors in healthcare assets. Due to the complexity of relocation, medical office buildings typically have lower vacancy rates than other types of commercial facilities.
- A medical practice may benefit significantly from being close to a hospital. Hospitals might send patients to private practitioners for their medical needs because of the location.
Conclusion
Commercial real estate is a factor to be considered by any investor wanting to diversify their holdings. More specifically, medical office real estate should be taken into consideration by investors trying to reduce risk. This illustrates how quickly the healthcare industry is growing. Due to its strong fundamentals, the MOB sector is attractive from a risk and return standpoint for various reasons.
