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.