Healthcare vital signs: Corporate healthcare operators

What is true right now

Real estate has moved from an execution detail to a gating factor on your growth plan, and the operators who see that early win.

This audience is planning growth into a market with very little available space. That is not a reason to slow down. It is a reason to move site control earlier in the cycle, where it becomes an advantage rather than a scramble.

Your de novo plan carries a real estate cost worth pricing now.

Occupancy is at a cyclical high, supply growth is 1.1% and space per healthcare employee has fallen roughly 9% from pre-pandemic levels. De novo expansion is entering a landlord's market, so the pro forma that reflects that today is the one that holds up. Site control belongs earlier in planning than it did three years ago.

Every renewal is a planning opportunity if you start it early enough.

Same-store rents are growing about 2% off a series-high base, and vacancy is minimal across most of the top 100 metros. Multi-site operators who model the full expiration schedule now keep their negotiating leverage. Portfolio-level planning is where that leverage lives.

Where the opportunity is

The off-campus thesis is no longer a thesis.

Off-campus medical office building occupancy has climbed from roughly 90.8% in 2021 to 92.1%, and the on/off-campus spread has compressed to a cycle low. Patient and provider migration to community-based, retail-adjacent locations is durable and now visible in the occupancy data. Your site strategy has the numbers behind it.

Conversion is the fastest route into a market with no space.

At $415 per square foot and a shorter delivery timeline, converting retail or office product is a practical entry for operators who cannot wait on ground-up delivery. In a supply-constrained market, speed to deliverable space is its own return.

Your owned real estate is the cheapest capital on your balance sheet.

Hospitals and health systems sold $0.8 billion of medical office at a 6.4% average cap rate over the past twelve months. Monetization pricing remains strong, and the proceeds fund core operations, technology and acquisitions without dilution. The building can pay for the growth.

Learn more about Northmarq’s National Healthcare Group

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