Investors are planning to put a lot more capital into health care real estate in 2022, including in life sciences space, medical office buildings and ambulatory service centers, according to a new national survey by CBRE.
The brokerage now estimates $25 billion in equity will be deployed into the sector this year due to the bullish sentiment, the resiliency of health care real estate during the pandemic and persistent demand. This estimate is further supported by 84 percent of survey respondents saying they plan to be “net buyers” of health care real estate in 2022, focusing mostly on behavioral health centers and life science assets.
At 85 percent, a vast majority of respondents said they see health care real estate as recession resistant. Indeed, nearly half of investors also said their health care portfolio suffered no impact due to the COVID-19 pandemic, with another 35 percent indicating they had experienced minimal impact.
“Health care and life sciences have been historically resistant to economic downturns and continue to be seen as a safe haven for real estate investors during times of economic distress,” said Chris Bodnar, CBRE’s co-head of health care and life sciences capital markets. “As a result, investors continue to allocate more capital to these properties, which provides stability and consistently strong yields.”
Amid commercial real estate’s year of setbacks and recovery, it became clear that life sciences real estate emerged as a highly desirable product type. Ninety-seven percent of survey respondents said they either expect demand for life sciences to be higher in 2022 or at least be the same as the record setting year in 2021.
That’s because biotech is booming, driven by a jump in private and public funding for research and development, technological advancements in data processing and gene sequencing. There are also strong demand drivers, including an aging population and rising health care costs.
Life sciences assets are also expected to see a shortage of supply despite a robust conversion pipeline in most primary cluster markets. Boston, San Francisco and San Diego remain the dominant markets, but new life sciences hubs are being built around the country. Raleigh-Durham, NC, Los Angeles, Philadelphia, Washington, DC, and Denver are rising rapidly. The Dallas, Atlanta and Phoenix markets have also begun to emerge over the past year.
Gregory Cornfield can be reached at email@example.com.