As the traditional office market faces rapid changes, the medical office sector is standing firm—driven by a constant need for in-person healthcare services. For many businesses, the rise of remote work has reduced the demand for office space, but healthcare remains an outlier. The demand for physical, well-located medical office buildings (MOBs) is growing steadily, a trend that Physician Property Partners (PPP), co-founded by Bob Waun of DIRT Realty in 2022, is capitalizing on.
"While traditional office space is undergoing significant changes, medical offices are a necessity," says Waun. "You can work remotely in many industries, but patients still need to visit doctors in person for critical care, procedures, and specialized treatment."
The Surge in Healthcare Demand
The healthcare industry is expanding rapidly, driven by a growing and aging population. According to the U.S. Census Bureau, by 2030, all Baby Boomers will be aged 65 and older, significantly increasing the demand for healthcare services. The U.S. Bureau of Labor Statistics also projects that healthcare employment will grow by 13% from 2021 to 2031, much faster than the average for all occupations, further fueling the need for dedicated medical office space.
Medical office buildings are particularly resilient, with vacancy rates much lower than those in traditional office sectors. In Q2 of 2023, medical office vacancy rates averaged just 7.2%, compared to nearly 18% for traditional office spaces. Additionally, healthcare-related tenants typically sign long-term leases, often ranging from 10 to 20 years, providing stable cash flows for investors.
Why Doctors Are Embracing Partnership Models
Physician Property Partners allows doctors to transition from being sole property owners to limited partners in a larger, diversified portfolio of MOBs. This shift provides physicians with the opportunity to reduce the risks and burdens associated with individual property ownership while still reaping the financial rewards.
“Our sale-leaseback model allows doctors to sell their buildings, reinvest as partners, and enjoy passive income without the headaches of management,” Waun explains. “Healthcare providers want to focus on medicine, not maintenance. This model gives them the security of real estate investment and the freedom to grow their practices.”
The Future of Medical Office Investment
As outpatient services and specialized care continue to expand, the demand for MOBs will only increase. According to JLL, over 30% of medical office development is in high-growth markets where healthcare services are in high demand. Coupled with the fact that more than 55 million square feet of new medical office space has been added to the U.S. market in the past five years, it's clear that the sector is on a solid upward trajectory.
"Healthcare will always be essential, and doctors need modern, efficient spaces to operate," says Waun. "By partnering with us, physicians are securing their financial future while contributing to a sector that shows no signs of slowing down."
Physician Property Partners is well-positioned to meet this demand, acquiring key medical office assets in high-growth areas across the country. For doctors looking to exit the complexities of solo property ownership and gain access to a diversified real estate portfolio, this model offers a path to both stability and growth in a changing real estate environment.
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