Taking the Pandemic Pulse of Healthcare Real Estate

August 26, 2021 • John Salustri

Nowhere have the transformational effects of the COVID-19 pandemic been more apparent than in the healthcare field itself and, specifically, the medical office building (MOB) sector. Indeed, from virtually all perspectives, be it management and ownership, leasing, investment or development, the pandemic advanced the already aggressive expansion of this market.

This, of course, is not to say that negative effects of the pandemic bypassed healthcare real estate altogether. Just as in the traditional office sector, medical office tenants experienced a period of uncertainty and caution, although experts attest to the shorter lifespan of that hesitation. And, as might be expected, there also were doctors and physician groups who already struggled with bill payments even before the pandemic or simply decided it was the proper time to hang up their stethoscopes. Those trends were accelerated as well.

Much of this was due to a dramatic 50-percent decline in patient visits, especially in the early weeks of the pandemic. The causes of this drop-off were two-fold. First came the fear of contact in a period of isolation. The second was regulatory restrictions on elective surgeries and procedures, which were deemed outside the umbrella of essential services.

But any downward impact of the pandemic was absorbed much quicker than in the traditional office market, and the rebound is already well on its way. As just an example, even the 6.4 percent drop in healthcare employment in 2020 “rebounded much more rapidly than the broader job market,” according to CBRE. Today, healthcare real estate can once again ride the wave that carried it along prior to the pandemic, a wave that will roll as long as people, from infants to seniors and everyone in between, need medical attention.

The other driver of MOB growth has been the trend, launched well before COVID-19, to take healthcare off the hospital campus and bring it into communities, with healthcare providers moving into vacant big-box stores or other retail locations. While this eases access for current and potential patients, it is not driven by altruism alone. Competition between health systems, cost management and containment and insurance pressures are all drivers of this trend.

Marcus & Millichap sees an acceleration of this change: “Prior to the pandemic, a structural shift in patient services away from hospitals and campuses was underway. This trend has been further enhanced by the health crisis as more individuals sought outpatient care and elective procedures in off-campus settings closer to home.”

So, as we wait to see the full impact of the COVID-19 delta variant surge, industry practitioners are taking the pulse of today’s healthcare real estate market and working to predict the future of the sector. BOMA International spoke with a number of industry experts about how the pandemic has shaped healthcare real estate in its Deep Dive No. 5: Taking the Pandemic Pulse of Healthcare Real Estate. Read the Deep Dive for more insights on everything from healthcare delivery trends, including telemedicine and other “digital-first” considerations, to investment and mergers and acquisitions activity in the sector.

Care to dive a little deeper? Watch this video interview between the author of Taking the Pandemic Pulse of Healthcare Real Estate and two healthcare real estate veterans who contributed to the Deep Dive.


Check out the full library of BOMA International’s Deep Dives at www.boma.org/DeepDives.



John Salustri is editor-in-chief of Salustri Content Solutions, a national editorial advisory firm based in East Northport, New York. He is best known as the founding editor of GlobeSt.com. Prior to launching GlobeSt.com, Salustri was editor of Real Estate Forum.