Healthcare Real Estate
What do you think about medical real estate and the future of healthcare? Especially after COVID, and other asset types showing their true colors, what are your thoughts on investment in medical real estate?
[{"id": "ftjwluu", "text": "Medical employment was weirdly hurt by a bad disease because of social distancing and the cancellation/postponement of a lot of elective procedures.  But assuming the virus comes under some control, which is highly likely, that employment will come back and medical's solid reputation will remain.\n\nThe drivers of medical are obvious; an aging, rich population in an unhealthy nation will go to the doctor a lot.  Office, medical included, was not overbuilt this cycle (with the exception of some local markets) so the fundamentals should be sound.\n\nThe secret, such as it was, is out and pricing reflects that.  You might find a deal on older properties, but the capex or enhanced TIs will eat at returns.\n\nAs to the future of healthcare, I'd first say try a different sub, because that's not this one's expertise.  Healthcare is a huge mess and we saw what happened when an overhaul was attempted.  There will hopefully be some incremental change, but healthcare tied to employment is a huge drag on job turnover.  Employers might be game to give up those healthcare costs.  Some of the more gold-plated healthcare plans can increase the cost of an employee by pretty large margins.  Of course the downside (from employer's perspective) is that employees would no longer fear losing their healthcare.  \n\nSee, I've already written as much about healthcare as I did about medical office without even addressing a possible fix even though I don't really know what I'm talking about.  In conclusion, investment in medical office should be a pretty solid play.", "replies": [{"id": "ftjxjf1", "text": "Appreciate the input. Definitely agree with the perspective.", "replies": [], "depth": 2}, {"id": "ftkwph9", "text": "Agreed with almost everything the poster said above. Something to consider is that just like there are different asset classes in real estate, that there are multiple healthcare niches within healthcare real estate. The poster above mentioned \"an aging population\" well that may not matter if you are focused on providing facilities catered toward pediatrics. Yes, it's painfully obviously relevant when discussing senior living but also important for a lot of other specialties as the longer people live, the more likely they will need to visit doctors.\n\nHealthcare could also include clean lab space like Alexandra REIT. That's interesting because a lot of companies do not have the expertise to design and maintain large clean rooms, but also would like to colocate with other companies in clean lab innovation centers like WeWork for clean rooms. A lot of the common factors discussed in healthcare do not drive this type of real estate but this is in fact a healthcare real estate play. Kind of reminds me of the data center space in terms of expertise needed.\n\nSeparately: If you want to learn about the risks of these assets, you can read the 10K's of the public healthcare REITs https://www.reit.com/what-reit/reit-sectors/health-care-reits Just note that public company risks listed on 10ks are extremely comprehensive and sometimes unrealistic. They're listed as a CYA, but will give you an idea of all possibilities.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ftkwv1n", "text": "Sorry OP, I replied to the other person's comment below. I'm just writing this comment to give you a notification", "replies": [], "depth": 1}, {"id": "ftl4z94", "text": "Anecdotally-- I own a healthcare facility and our tenants still need a place to consult and see patients; also they seem to prefer doing their telemedicine and phone consultations in the office since it is where they keep all patient charts and info (I'm sure they have a digital system but this seems to be their preference).  We haven't had a lapse in rent, thankfully, during the pandemic", "replies": [], "depth": 1}, {"id": "ftlnxuh", "text": "banner and other hospitals are buying up alot of property in AZ.\n\nalot of out patient surgury centers and other things", "replies": [], "depth": 1}, {"id": "ftnoe9t", "text": "Medical will never go away. Some of the biggest leases signed recently have been healthcare companies.", "replies": [], "depth": 1}]