MOB Conference Tracks Industry Challenges and Growth

By John B. Mugford

From the opioid epidemic to the flood of capital flowing into the sector, this year’s BOMA International Medical Office Buildings + Healthcare Real Estate Conference in Minneapolis was a true snapshot of the growing importance of medical office buildings (MOBs) in the delivery of care. A near-record crowd of more than 1,300 professionals attended the three-day event to hear topics ranging from the current disruptive forces impacting healthcare building design to strategies for recruiting physicians to fill MOBs and how to manage healthcare facilities during ownership changes.

Many attendees provided positive feedback on one keynote presentation in particular: the battle being waged, and seemingly being won, by CHI St. Gabriel’s Hospital in Little Falls, Minnesota, against the opioid addiction crisis. Registered Nurse Erin Foss, outreach coordinator for the hospital’s opioid program, said the program has a 60 percent success rate in breaking patients of their opioid addictions—this through both behavioral counseling and the administering of buprenorphine, a drug that helps in treatment with minimal side effects.

Christopher Bodnar, vice chairman of U.S. Healthcare Capital Markets with CBRE Group, Inc., noted that if there was an overall theme to the conference, it was that demand for acquiring and owning MOBs has continued to increase in recent years. "The capital markets have opened up, and companies are very active right now," he said, "whether it’s in development or investing. At the same time, the health systems continue to look for ways to expand their networks, all of [which] results in a very active healthcare real estate environment in 2019."

This notion was confirmed by several panelists throughout the conference. "Everyone is buying right now," said Evan Kovac, managing director and an MOB sales specialist with HFF (now part of JLL). "There’s more capital that’s been raised in the fund business than at any time in history," with much of that being earmarked for medical office buildings and other healthcare facilities.

Another panel, titled "Investor Strategies: Aligning with Capital Partners," included a discussion of the rising number of joint venture partnerships between healthcare development/management firms and large institutional investors. Such partnerships are beneficial to both firms involved, as the large investors often provide significant flexible and low-cost capital, while the experienced healthcare companies find the deals and manage the properties after they close.

One such partnership comprises developer Anchor Health Properties and The Carlyle Group. In just three years, the partnership has invested more than $600 million in MOBs. "We couldn’t have just entered this space ourselves without an experienced operating partner," Zachary Crowe, principal with Carlyle, told a packed room. "Anchor has been a great partner, as they’ve helped educate us on the nuances of and investing in this space."

In all, this year’s MOB Conference received high marks, according to attendees and organizers alike. "The networking just keeps getting better and better," said Jake Dinnen, senior vice president of development with San Diego-based PMB, minutes after the conference concluded. "We arranged lots of meetings this week that are going to result in business for us."

Courtney Nelson, system director of Real Estate Transactions with CommonSpirit Health (formerly Catholic Health Initiatives), co-chaired the conference with Bodnar, and noted, "I’ve heard from many people that this was one of the highest-energy and best BOMA MOB conferences they’ve attended. We took a hard look at programming and added new volunteers, new track leaders and had many new faces on panels each day."

Next year’s BOMA MOB conference will be held April 29-May 1, 2020, in San Diego.

ABOUT THE AUTHOR: John B. Mugford is the editor of Healthcare Real Estate Insights magazine at Wolf Marketing & Media LLC.