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What's Trending in Healthcare - And How it Impacts CRE Investors

The healthcare sector has been booming since the start of the pandemic, and experts are predicting trends for 2022 that will continue to drive investment appetite.

  1. Virtual Care (Telehealth): The emergence of the pandemic created the need for rapid advancement in healthcare technology, specifically, allowing for patients to be treated virtually. Telehealth is not only more convenient for patients, but also can increase the effectiveness of health providers and help to quell the effects of the ongoing labor shortage. Virtual healthcare cannot fully replace in-person care, but integrating the two will benefit patient and provider, and doctor’s office and ambulatory facilities will still be necessary, benefitting those that wish to invest in medical real estate in 2022.

  2. Outpatient Facilities: There’s an increasing need for outpatient care centers, and services that once were only available at hospitals are now migrating to more convenient outpatient facilities. Although these facilities may require extensive renovations of a shell space to meet medical guidelines, this provides a huge opportunity for CRE investors that have stand-alone buildings in their investment portfolio.

  3. Behavioral Health: Mental health has received a lot of attention during the pandemic, as studies are being released that show nearly half the adult population is struggling with some form of anxiety or depressive disorder. As the stigma is being reduced, the need for accessible care and facilities is rapidly increasing. Many of these mental health concerns can be addressed with telehealth, but we’re seeing a trend of institutional investors warming to the idea of behavioral health tenants occupying their properties. CRE investors can help create more access to these crucial services by including behavioral health tenants in their portfolios.

GlobeSt. reports that national healthcare spending is expected to surpass $5.2 trillion by 2025. As national spending increases so will the demand for medical space. Healthcare development may prove to be a challenge this year with looming supply chain issues, labor shortages and rising supply costs, therefore existing medical properties will be even more desirable, and transactions will be competitive. This could provide an opportunity for CRE investors to adapt their existing space to suit the needs of medical tenants, thus creating a property in arguably the most dominant sector in commercial real estate.

Justin Langlois, CCIM is a Commercial Real Estate Investment Advisor with Stirling Properties servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.

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