Most serious commercial property investors are well aware that multifamily apartment buildings are leading the commercial sector recovery. While apartment buildings are a very good opportunity, the competition for them has pushed up prices in many parts to the country. Another sector worth taking a close look at are medical offices.
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Private medical offices have real value both today and going into the future. Serious money like hedge funds, insurance companies, and pension funds are moving into private medical offices. Smaller investors should also be looking at single office practices and small medical complexes.
Reasons Medical Offices Have Strong Long Term Appeal
There are multiple reasons making medical offices a sound investment today. One of the biggest reasons is the sheer number of baby boomers entering their retirement years. A time when they will need more medical care. Of the 77 million baby boomers, 10,000 turn age 60 every day. Baby boomers are the last generation with widespread medical insurance after retirement.
Those without insurance are still eligible for Medicare at a rate of 2.5 million per year. Next, bring into the equation new medical patients being covered by Obamacare. Whether you agree with it or not, it is being implemented. The estimate is another 32 million people will soon be eligible to be treated at private medical offices instead of having to rely on hospital emergency rooms for non-emergency problems.
Think Beyond Medical Offices
The AARP estimates over the next 20 years the Medicare program will expand from 42.5 million people to about 70 million. However, these seniors won't only need medical treatment. As they age, many will move into assisted living facilities and nursing homes. Every sector of commercial real estate serving the senior demographic is poised to expand significantly.
Beyond the sheer number of clients, medical offices have high caliber tenants. These are not two high school buddies starting a hot rod garage without a clue about how to run a business. These are highly educated doctors with 12 years or more years of college education. These professionals have already shown a tenacity and dedication towards being successful.
Not only are they dedicated but they will fill these offices with expensive and specialized equipment. Doctors hire employees and bring on partners. They have every intention of succeeding. They will be long-term tenants. If you don't want to deal with plugged toilets and fussy renters that come with apartment buildings, you need to take a closer look at medical offices in the commercial sector.
About the author: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.