Healthcare real estate trends in a pandemic

Author Lisa Stern Read bio
Tags: healthcare pandemic
Date: April 14, 2021

The health emergency caused by the COVID-19 pandemic has affected the entire healthcare world since the beginning of 2020. It has changed not only our living and working conditions but also the way we perceive medical help and assistance. 

This pandemic has generated a crisis with consequences on all sectors, starting from healthcare, the economy, and the real estate market.

A lot of spaces have been modified to meet the new requirements of social distancing, but at the same time to meet the needs of work or/and leisure.

These changes will continue to affect the healthcare real estate market in the future in terms of trends and the characteristics of desirable hospitals and labs

This short preview of healthcare real estate in a pandemic aims to analyze the future trends in the growing life science market in the USA, and in particular in the metropolitan Bay area.

1. Buying, selling, and renting improvement

The pandemic has accelerated the healthcare momentum in the U.S, particularly amid the life sciences industry and in the race to produce a COVID-19 vaccine and develop other medicines for human diseases.

These changes also signify more growth for metros like California, which ranks third on the list of the largest U.S. life sciences markets. Thanks to loans from the federal government, hospitals succeeded to maintain staffing levels and continue to pay rent on their buildings, so the real estate aspect of healthcare is doing better than expected.

Through the “virtue of necessity”, many real estate agencies have transformed limitations into opportunities to implement, maintain and improve activities such as buying, selling, and renting medical and laboratory spaces.

The coronavirus accelerated the segmentation of healthcare spaces by the acuity of care, and despite all the turbulence, medical office buildings remained stable investments.

Pills on a blue and pink background

2. The age of responsive healthcare and technology

The COVID-19 pandemic has created a significant surge in the use of responsive healthcare and online help since March 2020. This certainly doesn’t mean that the on-site medical help is irrelevant, but the provision of virtual care has ultimately increased the need for healthcare real estate.

Technology increases patients’ touchpoints with the entire healthcare system, resulting in live-health care appointments, especially after the coronavirus pandemic.

3. Consolidation

The healthcare sector is likely to continue its consolidation increment as market players focus on more specialized product portfolios

The post-pandemic era has brought to light some larger healthcare groups, medical device producers and other investors that will most likely accelerate the acquisitions in the provider market, starting with:

  • Radiology,
  • Dentistry,
  • Ophthalmology, etc.

4. Segmentation of acute care and wellness locations

The rising demand for personalized health care among two seniors and millennials has been reshaping the healthcare real estate for years now, even before the Coronavirus pandemic, but after the pandemic, it is very likely to become a more integrated part of lifestyle within these two groups.

The Coronavirus will definitely accelerate the trend towards health care facilities focusing on higher acuity in-patient care, while preventive healthcare will take place in comfortable locations, such as in the heart of various community centers.

Innovative ways are needed to handle chronic illnesses and critical states that need extended treatment. That means an increasing number of rehabilitation centers with more spacious buildings and room units

5. Emerging new healthcare systems and facilities

There is a push towards the expansion of the health system, once again proving just how desirable medical office buildings are becoming for investors’ portfolios. Over the past few years, effective healthcare systems have been merging with physician-owned facilities. 

These individually-owned practices are resurfacing with modern and tech-inspired layouts required for the creation of a more extensive, accessible, and effective healthcare system.

If you wish to keep a keen eye on the healthcare industry and the expansion of life science spaces on the CRE market, pay attention to some more of our reports on coronavirus pandemic affecting the healthcare industry.

As an investor, you need all the help to spot investment or growth opportunities and take advantage of them. For more details on specific trends driving the healthcare changes, advances in information technology, connectivity to further development, advanced management techniques, and other services feel free to contact our experts.