Healthcare real estate investment expected to hit $25B this year: report

Investors increasingly see sector as recession-resistant

CBRE's Chris Bodnar (CBRE, iStock)
CBRE's Chris Bodnar (CBRE, iStock)

Money is expected to keep flowing into healthcare real estate this year as the sector draws continued interest from investors.

Approximately $25 billion of capital is expected to be allocated towards healthcare real estate this year, according to a CBRE report. That would mark a major increase from 2021, when transaction volume in the sector was just under $16 billion.

Buyers are planning to flood the market this year to take advantage of the booming sector. Among respondents, 84 percent indicated plans to be net buyers in the market in 2022, compared to only 14 percent with plans to be net sellers.

Medical office buildings were of most interest to respondents, with 99 percent saying the property type met their acquisition criteria. The biggest rise from the previous year was for ambulatory surgery centers, which are up 17 percent from 2021.

The stability of the healthcare real estate industry is driving the interest of investors. Almost every respondent to a survey by CBRE indicated occupancy in their portfolio either stayed the same or rose year-over-year in 2021. Only six percent of respondents cited a severe impact from COVID-19 in 2020.

Investors, meanwhile, are feeling increasingly confident in the recession resistance of the healthcare real estate industry, as 85 percent of respondents believed the sector will weather a downturn well — up 5 percentage points from last year.

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“Health care and life sciences have been historically resistant to economic downturns and continue to be seen as a safe haven for real estate investors during times of economic distress,” Chris Bodnar, CBRE’s co-head of healthcare and life sciences capital markets, said according to the Commercial Observer.

The report also touched on the booming life sciences sector, noting venture capital funding hit a record $32.5 billion in 2021. It’s expected to be another big year for life sciences in 2022.

CBRE surveyed healthcare REITs, private investors, institutional investors and healthcare real estate developers.

The strength of the healthcare real estate sector has created some major players in the field. Earlier this year, Healthcare Trust of America agreed to merge with Healthcare Realty Trust after advanced talks in February. As of those talks, the companies combined market value would be more than $11 billion.

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