GLOBAL HEALTHCARE SERVICES

NEWMARK

Newmark 2014 HEALTHCARE CAPITAL MARKETS

Article written by Spencer Hogan, Newmark Global Healthcare Services- Investor demand for medical office buildings accelerated significantly in 2014. The year closed with over $9 billion in total medical office building sales located in the US, a 21% YOY increase (RCA). According to RCA, the average capitalization rate by quarter for the year declined 30 basis points YOY to 7.24% from 7.54% and the average price per square foot increased $12 YOY to $223 from $211. Low capitalization rates were primarily driven by investors’ access to low costs of capital combined with an increasingly constrained supply of quality medical office assets.

While the most active buyers of medical office buildings in 2013 were private investors, the healthcare REITs dominated 2014 representing 47% of the buyer pool. The healthcare REITs raised over $9.28 billion in 2013 and rank within the top three capital raisers by property sector for 2014 (SNL Financial). The substantial amount of capital being raised continues to put pressure on the healthcare investment community to deploy capital.

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