What you should know:
1. Access to care and lower reimbursement rates are driving healthcare to the outpatient space, particular to medical office buildings, retail centers and off-campus facilities.
2. A Marcus & Millichap report claims single-tenant medical office buildings are attractive to private and institutional buyers, and that existing affiliated outpatient facilities are selling at a premium with some transactions returning up to 6 percent.
3. Another option for outpatient development is in existing retail space. However, because property owners value these spaces at a premium they often demand hefty redevelopment costs because of competition with other assets.
4. For example, a retail redevelopment that would have cost $65 a square foot years ago, could now be in the $150 range.
5. Despite a burgeoning movement to develop properties closer to consumers, most developers would still develop an outpatient facility on or nearby a hospital’s campus, said John Abuja, senior director at Marcus & Millichap.
“It’s not ‘build it and they will come,’” Abuja said. “They’re already there. That’s why most investors, if they could choose, would still rather be on campus or near campus with a medical office building.”
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