Heaps of capital and aggressive trading from REITs has turned the MOB investment market into a sellers' game. Colliers International SVP Beth Young tells us buyers now must work through challenges like amortized tenant improvements, shorter-term leases and non-credit tenants, which is driving many acquisitions and dispositions off-market. This is the ninth quarter in a row of decreasing cap rates for medical properties.

Buyers have told Beth they have even more to spend this year than last year; therefore there is more money flowing into the market and volume is up. Investor polls say there is approximately $14.5B in demand this year for medical properties. New players are coming into the market, intrigued by healthcare. Asian investors in particular have noticed the segment, and their money is focused on multiple types of properties including senior housing. To tap into the demand, many health systems are building their own MOBs and then selling them for the highest price.

Real estate demand in the pre-acute world includes wellness centers, urgent care and medical clinics. Investors of acute-care properties want hospitals, on-campus medical office buildings and ambulatory surgery centers. Investors of post-acute care want long-term acute care hospitals and rehab facilities.

Beth predicts continuing cap rate compression, capital going into health systems to fund expansions, and solutions that are consumer-driven—healthy for people and still profitable.