In a Sickly Market, a Healthier Asset
The New York Times reports: Few healthy spots can be found in the ailing real estate market right now, but some big real estate investors are discovering a measure of relief, or at least a better prognosis, in medical office buildings.
For the 12 months that ended on June 30, sales volume for medical office buildings slipped by around 20 percent from the year-earlier period, according to the latest data compiled by Real Capital Analytics, a research firm in New York. For all offices, the drop was 51 percent, it said.
Sale prices, however, have remained fairly strong. The average price per square foot for medical office space was $237 at the half-year point, up 6 percent from the same point of the previous year, compared with $257 for all offices, up 3 percent, according to Real Capital Analytics. The company said capitalization rates — the industry term for the initial rate of return — have also held steady, at around 7 percent nationwide.
Dan Fasulo, the managing director of research at Real Capital Analytics, says investors regard medical office buildings as "a good hold for a downturn." At the same time, though, he marvels at what the investment world considers a good performer nowadays. "The fact that I’ve gotten excited about a 20 percent decline signals just how bad the market in general is right now," he said of the sales volume.
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Posted by: Matt Stone