As the Patient Protection and Affordable Care Act reshapes the delivery of health care, investor interest in health care properties — particularly medical office buildings — remains strong in the Twin Cities and nation.
But a lack of supply has constrained investment activity, according to market observers.
Charles A. Greenberg, senior vice president of asset management for Minot, North Dakota-based Investors Real Estate Trust, said institutional investors tend to place a high value on the medical office building properties they own.
“There’s a lot of money out there that would like to be in medical office buildings,” Greenberg said. “But many … of the owners of quality ‘MOBs’ have no intention of letting them go right now.”
IRET owns various types of real estate in 11 Midwestern states. Because IRET is publicly traded, Greenberg said he can’t comment on whether the real estate investment trust is looking to acquire more health care properties.
Ben Thypin, director of market analysis for New York-based Real Capital Analytics, said the medical office category has been “the hottest by volume” for real estate investors not only in the Twin Cities but across the nation. The category includes doctors’ offices, urgent care clinics, and diagnostic laboratories and imaging centers. They typically produce stable cash flow that makes them particularly attractive to REITs.
In the Twin Cities area, 2014 purchase prices of medical office buildings tracked by Finance & Commerce have ranged from nearly $100 per square foot to $330 per square foot.
Thypin noted that the medical office building category has become more popular with investors because of the growing populations of insured consumers and senior citizens, and because hospital systems have been shifting more non-acute care to off-campus facilities, away from clinics in or near hospitals. Thypin also thinks sales activity this year has been limited due to a lack of properties available for purchase.
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Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.