Medical Office Space

While many real estate investments lose value, the medical office sector has shown remarkable resilience. According to a report by Marcus & Millichap Real Estate Investment Services, the sector is much more resistant than other types of property, and this tendency to continue projects.

Currently, the nation spends $ 2 billion in health care each year, by 2013 this number should increase to three billion dollars. In-fact, medical costs have increased an average of 7.7% over the last 10 years and now account for 17% of GDP. This exponential growth has been fueled by the large number of baby boomers who are rapidly increasing age and by 2013 the number of people over 55 have increased by 20%. As more people advance in age, their medical expenses will increase accordingly, fueling demand for the segment of medical offices.

Another driver of demand has been that from an "impatient patient care focus." This was caused by the escalating costs associated with hospital construction. A hospital bed is now estimated at only one million dollars, driving many new hospitals in the house only around 100 beds compared to older hospitals with nearly 800. This decrease in supply, coupled with increased demand from an aging population, has created a great need for medical office space.

These tendencies are reflected in the number of jobs in the industry. While the rate of growth of employment declined, employment growth itself is always positive. 50,000 jobs were added this year and another 200,000 should be added by year end. In 2013, 2.4 million jobs should be added to this area.

Despite these positive indicators, the vacancy should increase. This is due to economic conditions that forced many to refrain from spending the health care they have previously done. Ultimately, this vacancy is expected to increase 100 basis points this year, reaching 12.4% and rents will fall by about 2.7%.

This increase in the vacancy must be considered as a possible opportunity for those looking to invest. Unlike other sectors, property medical office is almost guaranteed to see a future increase in value that our aging population and increasing health costs. In addition, if you couple a medical office with an investment structure net rental, you can create a passive investment that will see real growth in the future. It's perfect for someone who wants to take a less active role in managing the property, but still see his property value escalation. The combination of increased demand, less space and higher employment are medical office real estate rental net investment attractive for the future.