Vital Signs December 2023: Healthcare Sector Outlook

Leasing in most markets has therefore maintained strong momentum this year. Occupancies continue to remain above 90% and rent increases—while tempered—remain generally between 2-3%. Despite these strong real estate fundamentals, the medical office capital markets landscape, like commercial office capital markets, has been particularly challenging, as limited liquidity and cautious capital have slowed transaction volumes dramatically.

Despite these headwinds, the overall healthcare sector continues to be supported by robust secular drivers, as overall healthcare spending is expected to continue to expand with a growing population entering the 65-and-older age cohort. This demographic tailwind, along with the patient demand for healthcare services and desire for convenient access to care, likely will buoy medical office through recent market turmoil.

U.S. Healthcare Spending: Historical & Projected

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000

Healthcare Spending in $Ms

2011

2017

2012

2021

2015

2013

2018

2016

2019

2014

2001

2010

2027

2022

2025

2023

2028

2026

2029

2024

2007

2002

2020

2005

2003

2030

2008

2006

2009

2004

2000

Year

Source: CMS, Cushman & Wakefield Research

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