Vital Signs: 2025 Healthcare Update

HEALTHCARE UPDATE

Conclusion

The healthcare commercial real estate market will experience continued growth in 2025 as the industry deals with market trends impacting leasing and transaction activity. • High occupancy rates means that opportunities for occupier growth within the existing inventory will be constrained across some markets. • Supply constraints may increase the viability of targeted conversions of office or other assets to healthcare assets; however, increased construction costs means that strategic planning is essential. • Lower interest rates are expected to increase capital availability in the sector, allowing some companies to refinance existing debt, providing more liquidity. However, rate cuts by the Fed are expected to be limited in 2025, keeping rates within 100 bps of current rates. • Transaction activity in 2025 is expected to increase as more investors look to take advantage of the growth potential in the sector.

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