MINNEAPOLIS, MINNESOTA (October 14, 2022) - Northmarq healthcare specialist Toby Scrivner (formerly of Stan Johnson Company) recently shared his insights in Wealth Management Magazine in an article focused on the medical office sector. The story highlights how rising interest rates and the threat of an economic downturn have slowed real estate investment across the board, including in the medical office space.
The decline of sales of medical office assets, however, is not as deep as it has been in other sectors, with the market well-positioned to weather the latest down cycle. In fact, healthcare is considered recession-resistant and as such isn’t impacted to the same extent as other sectors.
Buyers of healthcare-related properties are adjusting to the same rising interest rates as buyers of other asset types, noted Scrivner. Because of the increased cost of debt, many buyers are sitting on the sidelines for now, looking for yields and sale prices that are more reflective of this new paradigm in the marketplace. That has slowed down the sale process.
“That said, healthcare real estate is not experiencing the same slowdown as other product types,” Scrivner said. “This is largely attributed to the limited amount of healthcare products coming to the market annually and the ever-increasing number of investors who want to invest in this sector. There is still supply and demand inequality in the market. While there have been cap rate adjustments for some assets coming to the market, there are still assets going under contract at pre-rate hike cap rates.”
Other topics in the story include:
- Pricing expectations
- Medical office financing
- Buyer groups
- Opportunities in the market