Healthcare real estate investment has risen dramatically in the last five years, with investors betting that medical facilities will be increasingly important to an aging population.
Technological advances that allow doctors to monitor and engage patients remotely, as well as driverless cars and growing home care options, could keep many baby boomers living independently longer, Johnson suggests. In turn, that could extend care needs at outpatient facilities – and therefore more demand – as opposed to moving patients into long-term care facilities.
Annual revenue growth of around 3.5 percent, standardized protocols easily replicated across multiple locations, and insurance reimbursements mixed with patients paying out of their own pockets have made this possible.
The increasing private equity interest in healthcare operators should fuel an expansion of the facilities, giving a broader pool of net-lease investors more opportunities to own the buildings.
“As net-lease investors navigate the uncertainty of retail, the medical office space appears to offer an alternative, with strong, dependable returns that are less susceptible to disruption from e-commerce,” he says. “As long as trends in medical continue to point toward longer lifespans and increased care, healthcare real estate investment will remain critical and demand will increase.”