On-campus Medical Office Buildings: Is a Premium Warranted? If So, When and Why?

Article By Victor H. McConnell, VMG Health, and Andrew Dick, Hall Render Killian Heath & Lyman PC

Article Commentary Written by: Garth Hogan, Executive Managing Director, Global Healthcare Services Newmark Knight Frank

On or Off-Campus Premium? This discussion started years ago when hospitals started building off-campus outreach clinics to drive business back to the on-campus acute care facility. (hub and spoke) Rents for buildings located near the hospital have traditionally been higher than the off-campus facilities. It became a compliance discussion but the higher rates were usually driven by the medical office building owners maximizing asset value and no other purpose. Some of the obvious factors were proximity to the hospital, elevators, parking, patient accessibility and higher demand. As stated in this article, some hospitals have better parking and accessibility on-campus, some community based off-campus buildings have better parking and accessibility. Access, experience, outcomes and proximity to patients, are the primary drivers in demand for facility location. Savvy medical office investors, want to know if the facility has a strategic use and utilization suited for the future of healthcare delivery, regardless of whether it’s “on or off” campus.

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