As the COVID-19 pandemic ravaged the country last year, people stopped going to the doctor — in person, that is. People still consulted with their GPs, but did so via means like telemedicine, causing physical doctors’ visits to drop by 60 percent last year.
But through all of that, real estate investors kept putting their money into commercial medical properties, The Wall Street Journal reported on Tuesday (April 13).
“Investors say there are a number of reasons to favor medical offices even as property owners turn more bearish on conventional office buildings, which have been upended by the new popularity of remote work,” noted the report. “For one, doctors and medical firms paid their rent during the pandemic. Landlords have collected more than 95 percent of what they are owed, according to data firm Revista LLC. Some office landlords with mediocre property, by comparison, had rent collections lower than 85 percent, according to market participants.”
Revista’s findings show sales volume for commercial real estate dropping 32 percent between 2019 and 2020, with one exception: medical office buildings. Investors snatched up $11.2 billion of these properties in 2020 — just a slight decrease from the previous year — with buying picking up at the close of the year.
The trend hasn’t slowed this year, noted the WSJ, with “a venture including MedCraft Investment Partners” devoting a $200 million fund to acquiring medical offices, and Kayne Anderson Real Estate nearing closure on a $2.5 billion fund, half of which will go toward medical properties.
That isn’t to say there isn’t a market for commercial real estate. As PYMNTS reported last month, American retailers are eyeing vacant storefronts as a variety of national chains plan to open new brick-and-mortar locations.
Merchants have announced 3,199 store openings vs. 2,548 closures this year compared to last year, which saw nearly 9,000 retail addresses close and fewer than 3,300 new stores open.
Selected by EFXA