Real Estate Trends in the Healthcare Sector

I keep hearing "Nobody wants office buildings anymore." But a Long Island office portfolio just secured $280 million in financing. That should make everyone stop and think. Here's what I think is really happening: The office market is splitting into two completely different worlds. On one side are older commodity office buildings with weak tenancy, short lease terms, and no clear path forward. On the other side are properties occupied by healthcare tenants like Northwell, NYU Langone, Catholic Health, ProHealth and other medical users. Those buildings are attracting lenders, investors, and buyers. Why? Because people may stop going to an office. They are not going to stop going to the doctor. That is why the most important number in this story isn't the $280 million loan. It's the fact that 58% of the portfolio is leased to medical tenants. The smartest owners on Long Island figured this out years ago. Many office buildings are no longer office buildings. They are becoming healthcare real estate. And the owners who adapt to this reality will be rewarded. For years I have said that broad statements like "office is dead" are dangerous. - Real estate is local - Real estate is property specific - Real estate is tenant specific A fully leased medical office building and an empty commodity office building may both be called "office," but they are not the same investment. The future of Long Island office real estate may have a lot less to do with desks and cubicles and a lot more to do with doctors, healthcare systems, and outpatient care. This $280 million refinancing is another sign that the market agrees.

The Most Overlooked Real Estate Asset Class for Passive Income in 2025? Medical Office Buildings. Not sexy. Not speculative. Just stable, cash-flowing, and built for long-term wealth. Here’s why smart capital is moving in fast: ➡️ 1. Recession-Resistant Demand Healthcare isn’t optional. Even during downturns, people don’t skip doctor visits. → MOBs stayed strong while traditional office & retail got hammered. ➡️ 2. Long-Term Leases, Sticky Tenants Medical tenants invest heavily in build-outs—exam rooms, labs, HIPAA infrastructure. They don’t leave easily. → Typical leases: 7–15 years, with annual rent escalations. Predictable NOI. ➡️ 3. Aging Population = Mega Tailwind By 2030, 70M+ Americans will be 65+. → Healthcare spending is 5x higher for this group. → Outpatient care is booming. MOBs are the front line. ➡️ 4. Institutions & REITs Are Scooping Up Inventory Family offices, REITs, and private equity love MOBs for one reason: → Durable income + low turnover + tax efficiency. ➡️ 5. It’s Happening in Real Time Stream Realty is developing a $4.8M MOB campus in San Antonio right now. Class-A space. Already leasing. This is where growth capital is going. They generate real cash flow, hedge against volatility, and scale beautifully over time. If you’re tired of betting on the next big thing… Maybe it’s time to start betting on what actually lasts. Want to learn how investors are building real wealth through medical real estate? Let’s talk.

I came across this chart in a Realty Trust Group white paper on how health systems can raise capital through their real estate holdings. It shows healthcare real estate transaction volume (bars) and average cap rates (gold line) over time. A few observations: ▪️ Transaction volume — the total dollars flowing into healthcare properties — has grown steadily for just over a decade - reaching a peak of $22B in 2022. Between 2014 and 2024, roughly $140 billion in healthcare real estate changed hands — much of it through sale-leasebacks and portfolio acquisitions. ▪️ Cap rates — which represent expected return and move inversely to price — fell from around 8.5% in the early 2000s to near 6% before edging up again after 2022. Falling cap rates mean investors were willing to pay more for each dollar of rent — a sign that healthcare real estate had become one of the most sought-after “safe haven” asset classes. The 2022 peak likely reflects a mix of pandemic-era liquidity, access to cheap capital, and health systems monetizing properties to raise cash. But what I see is real estate proxy for consolidation. When hospitals and physician groups sell off their buildings to raise capital, the ownership of those facilities often transfers to large institutional investors or REITs. Those investors, in turn, tend to aggregate assets into portfolios — often leasing them back to the same few national systems or PE-backed platforms. Here are a handful of examples: ▪️ Tenet sold billions in hospital properties to outside investors and then used the proceeds to expand its USPI surgery center network nationwide, helping drive Tenet’s consolidation strategy. ▪️ In 2021, CommonSpirit Health partnered with LifePoint Health to create a new company called ScionHealth. The deal was backed by Medical Properties Trust (MPT), which paid roughly $1.3 b for much of the hospital real estate involved (61 community hospitals), bought much of the hospital real estate involved. MPT then leased the hospitals back to the new entity, giving CommonSpirit and LifePoint a quick infusion of cash while also transferring ownership of dozens of local hospitals to a single, investor-backed operator. ▪️ Between 2018 and 2020, Prospect sold most of its hospital real estate to Medical Properties Trust (MPT) for about $1.55 billion, using the sale-leaseback for the capital needed to grow quickly. MPT then leased back the hospitals to Prospect under long term lease agreements. The hospital operating company was burdened with long-term rent and financial troubles. And finally, the tax implications. REITs and private-equity landlords can depreciate the property, deduct interest, and shelter income, all while collecting rent from a tax-exempt captured tenant. A formerly public asset has been converted into a private, income-producing investment — tax-advantaged, long-term, and backed by the very hospitals it once served. Dutch RojasStacey RichterAnn KempskiPreston Alexander

🏥 Why Real Estate Is the Most Strategic Decision in Healthcare — And How Dubai Is Shaping the Future In healthcare, real estate is not just a building. It is clinical infrastructure, operational strategy, patient access, investor value, and long-term scalability — all in a single asset. For hospital CEOs, operators, and investors, choosing the right real estate determines whether a healthcare organisation thrives or struggles with inefficiency and underperformance. Dubai’s rise as a global healthcare and life-sciences hub makes this strategic alignment more critical than ever. 1️⃣ Real Estate Drives Clinical Excellence Healthcare buildings shape: • Clinical workflows • Infection-control and HVAC performance • Licensing readiness • Staff productivity and safety • Future adaptability (rehab, mental health, long-term care, oncology, day surgery) A well-designed asset enables high-quality care instead of limiting it. 2️⃣ Real Estate Is a Financial Engine The strongest healthcare operators and investors see real estate as a value creator, not a cost centre. A healthcare-ready asset delivers: • Optimised occupancy cost • Lower retrofit and compliance risk • Stronger insurer alignment • Higher asset resilience • Sale-and-leaseback potential with healthcare REITs Good real estate strengthens the balance sheet and the brand 3️⃣ Patient Experience Begins With the Building In Dubai’s consumer-driven healthcare environment: • Natural light • Parking + easy drop-off • Patient flow and wayfinding • Mixed-use convenience (hotel, F&B, retail) …all influence where patients choose to receive care — and whether they return. 4️⃣ Demographics Are Re-Shaping Healthcare Demand Dubai’s population profile is unique: • Young workforce → urgent care, wellness, sports medicine, fertility • Rising older segment → oncology, cardiology, chronic care, rehab • Multicultural expatriate base → convenience-driven, insurance-led behaviour Dubai’s fastest-growing healthcare demand corridors These include: • Dubai South • Creek Harbour • Meydan • Al Khail Corridor • Dubai Hills / JVC / JVT Early clinical presence in these areas = long-term competitive advantage. 5️⃣ Referral Satellite Clinics Are the New Growth Architecture Successful operators are shifting from standalone hospitals to hub-and-spoke ecosystems: • Satellites capture early demand • Feed tertiary hospitals with referrals • Handle chronic care, follow-ups, physio, diagnostics • Improve insurer partnerships • Strengthen brand visibility across communities Hub-and-Spoke Healthcare Model 💡 Final Thought Real estate determines: • Clinical capability • Patient access • Care quality • Financial resilience • Brand strength • Future scalability Dubai’s evolving healthcare ecosystem offers a once-in-a-generation opportunity for those who integrate real estate intelligence with clinical strategy, demographics, and distributed care models.

Why Medical Outpatient Buildings Are Gaining Investor Attention - Healthcare delivery continues to shift away from hospitals and into lower-cost outpatient settings — and investors are taking note. Medical outpatient buildings (MOBs) are positioned to benefit from one of the strongest demographic and economic tailwinds in the U.S. Here’s why: 📈 Durable Demand Americans over age 65 account for just 17% of the population but 37% of all healthcare spending — and that population is projected to rise from 56M to nearly 95M by 2060. 🏥 Recession-Resistant Cash Flow Healthcare spending remained resilient through the last three economic downturns and currently represents 18.5% of U.S. GDP — with expected annual growth of ~5%. Cash flows tied to essential healthcare services have historically shown low correlation to broader economic cycles. 📌 Strong Occupancy & Retention Medical outpatient assets maintain exceptionally high occupancy — 93% in 4Q24, materially higher than traditional office — and renew at far stronger rates. 💸 Attractive Entry Pricing & Positive Leverage Today’s market features average cap rates ranging from 6.4% to 7.0% for MOB acquisitions in the 30k - 50k square foot range. With fixed-rate medical debt currently costing less than cap rates, investors can capture positive leverage from day one. 🌎 Aligns With U.S. Healthcare Transformation Same-day surgery, specialty care, diagnostic services, and lower-cost treatment settings are all growing rapidly. That accelerates tenant demand for modern outpatient facilities — particularly in high-growth regions such as Texas and the Southeast. Bottom Line: Medical outpatient buildings combine durable tenant demand, sticky occupancy, and stable cash flow — all backed by a demographic wave that will continue building for decades. For investors seeking consistent income with insulation from economic volatility, MOBs may be one of the most compelling opportunities in today’s private real estate market. https://lnkd.in/g8gvCugr to learn more.

Follow the retirees, and you’ll see the future of real estate demand. The USDA’s 2025 data shows where counties are attracting Americans ages 55–74 in big numbers, places where retiree migration increased 15%+ between 2010 and 2020. Not surprisingly, Florida lights up the map. But so do parts of the Carolinas, Arizona, Nevada, and non-metro mountain counties in the West. Here’s the takeaway: retirees don’t just bring their golf clubs, they bring housing demand, healthcare demand, and local spending power. And as Boomers continue to retire at scale, these migration patterns will reshape entire county economies. For real estate investors, developers, and city planners: ✅Retirement destinations = long-term demand anchors. ✅These markets often need senior housing, healthcare facilities, smaller-scale retail, and service-oriented housing solutions. ✅The growth isn’t just in metros; nonmetro “lifestyle counties” are just as important. #RealEstate #Demographics #RetirementTrends #HousingDemand #MigrationPatterns #AgingPopulation #MarketInsights #FutureOfLiving

Friends – From time to time, Joel Swider and I like to take a break from reporting the headlines and tell you what our real estate attorneys, paralegals and consultants are working on across the country. 1.     Senior Housing Projects – We can’t say enough about the high level of senior housing activity right now. The public Real Estate Investment Trusts (“REITs”) are buying everything in sight, or so it seems. We’re working with several regional senior housing developers and operators on the disposition of senior housing communities to public REITs. We’re also working with one operator to establish ancillary health care services to be provided within their senior housing communities. 2.     Medical Outpatient Building (“MOB”) Projects – Hospital systems continue to sponsor new build-to-suit MOB projects across the country. We’re working on several right now. The projects tend to be owner-occupied and either funded entirely by the hospital or through nonprofit real estate foundations. We’re assisting with at least three projects located on new outpatient campuses being established by hospitals. Another MOB project is within a retail setting. 3.     Specialty Hospital Projects – Build-to-suit inpatient rehabilitation hospital projects are still making headlines. We’re working with one operator on a number of new projects. We’re also working with clients to reposition a behavioral hospital and several long-term acute care hospitals. 4.     Land Projects – Hospital systems continue to go big on land deals for new hospital campuses. We’re working with several hospital systems on large land transactions in growing markets. These projects are incredibly interesting and often involve unique land use and infrastructure components. 5.     M&A Projects –We are supporting clients in M&A transactions involving hospital system acquisitions and affiliations. Our real estate team is negotiating transaction documents and conducting real estate due diligence. 6.     Property Tax Exemption Projects – We are also helping nonprofit health care clients in several states navigate property tax exemption issues tied to new development projects. Several recent projects involved nonprofit clients who were able to obtain exemption from property taxes on newly constructed MOB improvements sitting on ground-leased land. 7.     Portfolio Leasing Projects – More and more health systems have been relying on our team to help them navigate the high volume and high regulatory sensitivity surrounding their leasing portfolios. We have an excellent team with capacity to support the real estate, legal and compliance functions of our hospital clients in this area.

Rumor has it that the Australian healthcare real estate sector is brimming with opportunity, especially in fast-growing health precincts. But savvy investors don’t make decisions based on rumors, right? Our Pacific Research team, headed by Sameer Chopra, recently took a deep dive into the Australia’s booming healthcare real estate sector, and discovered some compelling data. In a nutshell, here’s what they found: In 2023, healthcare spending hit $260 billion, and it’s set to grow by 3.5% annually, outpacing GDP due to our ageing population and rising healthcare needs. While public hospitals are expanding, they’re struggling to keep up with demand, making private hospitals - already responsible for 40% of services - even more essential. These private hospitals have proven resilient, with 80% of their revenue coming from reliable sources like government contracts and private health insurance. For investors, this sector offers a rare blend of stability and growth. Large-scale private hospital real estate deals are few and far between, so establishing strong relationships is crucial to securing these valuable assets. There’s also significant potential in health precincts, where public and private services integrate with research, education and accommodation, driving up land values and demand. With long-term leases, CPI-linked rent increases and Government backing, the returns here are not only appealing but come with lower risk. If you're looking for a sector that ticks all the boxes, healthcare real estate is worth exploring! 😉 #Growth #Investment #Healthcare #RealEstate   Marcello Caspani-Muto, Jimmy Tat, Kai Wang 王凯, Edwina Blake David Kristjanson, PMP Ian Anderson Joanne Henderson Mark Vito, Allison Simpson David Williams Paul Peeters Mukesh Hemrajani Tom Hollinden Matthew Knowles Mark Granter Matt Gardner Keith Harris Tom Morgan MRICS

Healthcare real estate is entering a transformative year. Our latest report, 2026 Healthcare Real Estate Trends to Watch, explores the forces shaping the industry—from technology-driven efficiency and ambulatory growth to patient experience and policy uncertainty. Key insights include: ✅ How CRE technology and data intelligence can expand margins ✅ Strategies for navigating consolidation and funding reductions ✅ Why patient experience is now a business imperative Download the full report: https://bit.ly/3N6kt7E Are you ready stay ahead of change and position your organization for success in 2026? Connect with us today. #OneJLL