14C — September 17 - October 21, 2021 — Fall Preview — M id A tlantic Real Estate Journal
www.marej.com
H ealthcare
By Cory Atkins, Atkins Companies Healthcare real estate primed for continued strength in 2022
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ince March of 2020, the global economic, po- litical and social picture
lenging times, one asset class continues to stand out as a model of stability – health- care real estate. Where is the healthcare market today? Al ready underway be- fore the pandemic, the con- solidation and acquisition wave that has swept over the healthcare industry has caused healthcare systems to increasingly analyze their footprints and identify stra- tegic growth opportunities in both their service lines and areas of operation. Concur- rently, a shift away from an
inpatient, hospital-centric healthcare model to an out- patient, community-based healthcare model has led networks to reevaluate their real estate needs to diversify and streamline off-campus spaces more precisely. The pandemic only accel- erated this trend. Like so many industries, much of the non-essential healthcare ecosystem shut down in the early days of COVID-19. However, as the pandemic continues, the resiliency of the decentralized model of healthcare delivery has al-
lowed healthcare networks to resume their regular de- livery of care from a wide range of convenient locations even as their hospitals faced repeated surges in COVID- 19-related admissions. The dispersed model of care has also ensured that healthcare systems added convenience to patients’ daily lives as they navigate the challenges of life in the pandemic. Ultimately, while the outpatient, commu- nity-focused model was al- ready widely accepted by the industry before COVID-19, its success during the pan-
demic has given healthcare systems even more reasons to continue to implement it across their footprints. This stable business model has not gone unnoticed by the investment community. Previously, the healthcare real estate sector was treated as a niche asset class heavily dominated by specialty RE- ITs and investors that histori- cally only focused on the asset class. However, the asset class’ strength compared to other real estate investments and non-alternative invest- ments like stocks ensures that healthcare real estate is now being mentioned in the same breath as the red- hot industrial asset class by private equity firms, private capital and institutional in- vestors who had previously not show an interest. With this increased interest and significant capital on the sidelines looking to be de- ployed by investors, pricing for healthcare assets has hit record highs and shows no signs of slowing. Looking to 2022 As we enter the fourth quarter of 2021 and look towards the new year, the underlying fundamentals of the asset class – growth of regional healthcare systems, need for healthcare services and resiliency - remain un- changed. Where other asset classes such as office and re - tail continue to see significant uncertainty entering 2022, this resiliency and the essen- tial nature of the healthcare industry have provided the requirements for long-term stability. Along with the continued high pricing environment, limited ground-up develop- ment sites found in the more densely populated areas of the Mid-Atlantic region will also open up opportunities for an increased number of strategic repositionings of ob- solete office and retail assets towards healthcare usages. The highly favorable mar- ket conditions, proven busi- ness model and promising redevelopment landscape provide the ingredients for an active and competitive year ahead in healthcare real estate. Cory Atkins is the vice president and director of acquisitions at Atkins Companies. MAREJ
h a s b e e n def ined by c o n s t a n t turbulence. For inves- tors of al l types, this turbulence ha s ma d e it more dif-
Cory Atkins
ficult to identify opportuni - ties to deploy capital in line with their investment goals. However, as investors search for yield during these chal-
Over six decades of commercial real estate development, ownership, and management experience
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