We are a fund that has been involved in a couple of office deals over the past few years. During that time, we have taken a look at a couple opportunities related to medical real estate. We passed on the opportunities at the time but have seen more and more groups investing in medical real estate. Did we miss the boat or are there still deals to be had in this asset class? What are some of the best opportunities at the moment as far as medical real estate?
I apologize as we have not done many medical real estate although, we are assessing a few right now. In my opinion, I do not think you can ever miss the boat on medical RE. Medical RE is something that will always be needed and required by everyone; therefore, no matter the period or cycle, it would always be a good investment.
Unfortunately, because this is not a legal question, I am not able to answer it; I would, however, suggest that you contact a broker who deals primarily or exclusively in the medical arena to see what trends it is seeing. Given the consolidation of the market coupled with the plethora of regulations for this industry, the market may have shrunk for expansion in this area; however, if that's the case, then you may wish to explore purchasing these assets for an alternative use.
Medical is a small but increasingly popular component of the US commercial real estate industry. Given that its growth is a response to the growth and changes in the US healthcare and medical sector, an in depth understanding of that sector is critical to developing an investment strategy in real estate for the sector. Interestingly, the US is not creating either doctors or nurses sufficient to meet increased demand necessary to meet our growing population or aging of larger generations like baby boomers. This is driven by a few factors, including major changes in medical reimbursements and regulations, constraints of insurance and healthcare systems and, oddly, limitations in medical school and residency training slots, that artificially constrains the number of MDs that can be produced each year through our education and training systems. The foregoing would suggest that there is not a major increase in the number of doctors, so demand for medical space would be constrained. What is changing is how doctors and medical institutions operate. More doctors are giving up small individual medical practices, which was how many doctors practiced for many years, and are going to work for the large medical centers or HMO's which are typically in larger facilities housing more doctors, more advanced medical equipment and support personnel and located near hospitals and medical centers. Focusing on this trend and getting it right could be a very fruitful pursuit in real estate investment but would usually require construction of a special purpose, modern, technologically adept facility associated with a major medical center or HMO.
The answer is that there are opportunities for medical office, but they are dependent on the market, the competition, and, today, the state of the industry. With so many mergers and acquisitions on the retail, drug, urgent care and medical, it is a changing scene. But one that is still growing. I am working on a conversion project for a medical office building on long island at the present time. You may need eyes on the ground in the US to look for developing opportunities.
Still opportunities as the sector is growing. As a reference, Fosun has just started investing in this sector through a US platform that they acquired. If your fund would like to review some opportunities.
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