Doctors Orders: Find a Medical Office

According to CBRE data, medical office vacancy rates have consistently been lower than the total office sector.

We aren’t getting any younger, but we are living longer than ever before. According to Stanford, expected human life spans are increasing by three years every 25 years. To put that into perspective–every human, on average, could live six years longer than their grandparents.

Right now, 16% of the U.S. is 65 years and older and this cohort needs medical services seven times annually, representing 36% of total health care spending (which has increased by 3.7% on an annual basis since 2010). 

So how does all that relate to commercial real estate?

With rising costs at the forefront of patients’ minds, many are foregoing hospitals and choosing outpatient facilities, such as urgent care. Urgent care centers are essentially on-demand care outlets equipped to treat serious ailments, including fractures, sprains, and wounds, making them (usually) a cheaper alternative to the ER. In fact, a 2016 study found that ER treatment costs were about ten times greater than in an urgent care center. So supply is ratcheting up to meet the demand for medical office space. According to Consumer Reports, the number of urgent care facilities increased from 6,400 in 2014 to 8,100 in 2018 and handle about 89MM patient visits each year–more than 29% of all primary care visits and nearly 15% of all outpatient physician visits. 



CBRE reported that the number of outpatient facilities overall jumped from 26,900 to 40,600 between 2005 and 2016. The national price per square foot of medical office properties has followed, boosting from $158 PSF to $283 per SF. Meanwhile, medical office vacancy rates have consistently been lower than the total office sector. Vacancy rates dipped from 11.1% in 2010 to 8.4% in the second quarter of 2018. 

Interested in learning more about the state of commercial real estate?

Download Market Views, the latest research report from our Investments Team.

The views contained in this report are our own, based on the combined knowledge and experience of our Investments team.

Related content >

This article was written by an employee of CrowdStreet, Inc. (“CrowdStreet”) and has been prepared solely for informational purposes. The information contained herein or presented herewith is not a recommendation of, or solicitation for, the subscription, purchase or sale of any security or offering, including but not limited to any offering which may invest in the geographic area(s) or asset type(s) mentioned herein, whether or not such offering is posted on the CrowdStreet Marketplace. Though CrowdStreet believes the information contained and compiled herein has been obtained from sources believed to be reliable, CrowdStreet makes no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the subject thereof. All projections, forecasts, and estimates of returns or future performance, and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions.

CrowdStreet is not a registered broker-dealer or investment adviser.  Nothing herein should be construed as an offer, recommendation, or solicitation to buy or sell any security or investment product issued by CrowdStreet or otherwise. This article is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate.