Do you want to invest in commercial real estate but aren’t sure which category to choose? While disruptive factors (e.g., volatile economic conditions) can affect any industry, some sectors are so essential that they’re nearly guaranteed to sustain demand, regardless of changing circumstances. One of those future-proof industries is healthcare, according to Investopedia.
Subsequently, if you’re thinking about buying into commercial real estate, medical office space will likely pay off. Here are a few of the top reasons why investing in medical office buildings is wise, according to commercial real estate experts.
1. The U.S. population is aging, driving demand for healthcare.
As the Baby Boomer generation ages, people aged 65 or older account for a growing percentage of the U.S. population. In 2020, the older population reached 55.8 million, or 16.8 percent of the total U.S. population, according to the United States Census Bureau. By 2030, all of the Boomers will be 65 or older.
Senior citizens spend approximately three times as much on healthcare as younger people; an older population portends greater demand for medical services, making medical outpatient buildings a sound investment, according to the National Association of Realtors (NAR).
2. The outpatient care market is on the rise.
Demand for outpatient procedures is increasing as patients seek convenient and affordable treatment. The outpatient care market in the U.S. is expected to experience significant revenue growth in the near future, with an estimated annual growth rate of 4.39 percent between 2025 and 2029 and a total market volume of $929.01 billion by the end of that period, according to Statista.
3. Medical outpatient buildings have performed well historically.
If you look at the medical outpatient industry’s track record in the commercial real estate world, NAR notes that it has tended to result in higher income returns as well as lower return volatility compared to other asset classes. Past performance is often an indicator of future results, so it follows that investing in medical office buildings is a smart move.
4. Medical buildings tend to be recession-resistant.
While properties like office buildings and retail space can take a hit during hard times, medical outpatient buildings typically remain profitable during economic downturns, according to Physician Side Gigs. For example, medical buildings weren’t hurt by the pandemic in the same way that office space was.
5. U.S. healthcare spending is high and rising.
Healthcare spending is consistently high in the U.S., and we can expect it to grow as the population ages. In 2023, U.S. healthcare spending grew 7.5 percent and reached $4.9 trillion, accounting for 17.6 percent of the country’s gross domestic product (GDP), according to the Centers for Medicare & Medicaid Services (CMS).
If you want expert guidance as you consider how to invest in medical office buildings, the Avalon Realty Associates team offers property investment services. We’ll protect your investment like we own it; you can count on us for skillful negotiating, researching and closing deals.
Start now by calling 847-506-1000 or emailing info@avalonreal.com.