Between 2018 and 2019, developers saw a cost increase of 10% to 30% in construction, with an additional 15% to 20% price increase in the last several years.
To make up for raising construction costs, developers are driving up rent costs. Between 2020 and 2021, ASCs were generally priced at $550 per square foot.
Now, new ASCs are generally priced at or above $650 per square foot, an increase of 18.8%. In 2020 and 2021, developer rent yields were generally pricing at 6.75%. Currently developer yields are generally pricing at 7.75%, seeing an approximate 35.7% increase in rents.
Over roughly the same period, reimbursements from CMS have been slightly under 10.0%, according to the report.
New medical outpatient space is generally achieving rental rates ranging from $28 to $35 per square foot, net on a national basis — an approximate $5 to $10 per square foot increase over 2019 levels.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.