Medical Office Market
Aging Population, Revitalization of Industry Boost Medical Office Market
The aging U.S. population is contributing to a rise in healthcare needs, supporting a bright outlook for the medical office sector. The age cohort consisting of residents 65 and older will rise by nearly 42 percent over the next 10 years as more than 20 million join this segment. As a result, the 65-plus age cohort will account for 20 percent of the total population. At the same time, hiring in healthcare and related industries will increase 17 percent to meet the growing demands of an older demographic, though a potential physician shortage will remain a concern. A boost in healthcare needs will bode well for medical office assets, though the long-term effect is hard to project due to a rise in in-store clinics, telemedicine, the care delivery model and industry consolidation.
The revitalization of the healthcare industry is placing medical services into the local community, providing a more patient-centered model. The trend toward this level of care has encouraged providers to expand outpatient services into more retail-like settings, providing easier access to patients and capitalizing on strong traffic and demographic trends. Amid consolidation, major medical providers account for a large share of all leasing decisions and tend to favor properties providing more-modern amenities. Newer-vintage assets will continue to fare well; however, vacancy at outdated centers will rise amid physician retirements and hospital acquisitions.