Healthcare Market Expected to Continue its Growth in 2016

By  Colliers International Group Inc., Special for  USDR

Colliers International Group Inc. (Nasdaq: CIGI) (TSX:CIG) today released its 2016 Healthcare Marketplace research report, an analysis of the industry and its effect on commercial real estate in the U.S. The report finds there will be continued strong demand for medical office space and strengthened investor appetite driven by higher yields, low interest rates and stable tenants. The retail market is also expected to continue to see a boost as medical clinics and urgent care centers lease space in shopping centers where traditional brick and mortar retailers have left  vacancies.

“In a push to lower costs, healthcare providers have been shifting care away from hospitals to outpatient facilities for several years. This ongoing movement further increases demand for medical office space,” said Mary Beth Kuzmanovich, National Director of Healthcare Services for Colliers. “Existing facilities will have to be renovated and new buildings will need flexible designs to keep up with emerging healthcare technology, which is transforming how and where patient care is  delivered.”

Despite focused efforts to reduce healthcare costs, Colliers’ analysis finds that costs will continue to rise. A larger pool of actively insured Americans, due in part to the Affordable Care Act (ACA), combined with an ever-growing aging population, is driving health expenditures higher—topping $3 trillion in 2014 and projected to reach nearly $5.5 trillion in  2024.

As a result, hospitals and healthcare systems are actively seeking more effective solutions to cut costs and reduce spending, while improving the quality of care. The “retailization” of healthcare continues to gain ground as an answer to lowering costs and providing more accessible locations. Also, mergers and acquisitions of physician practices, hospitals and healthcare systems are widespread as larger, combined organizations pursue greater negotiating leverage and improved  efficiencies.

Even with these challenges in the healthcare industry, investor demand for quality assets with credit tenants remains strong. 2015 has been a banner year for medical office sales and demand should remain healthy through 2016. Investors not traditionally accustomed to investing in medical office properties have been drawn to the sector through the availability of debt, shrinking yields in other asset classes and demographics that point to massive growth in  demand.

Additional key findings from Colliers’ report  include:

  • Medical Vacancies Declining: Demand for Medical Office Buildings continues to be robust. Through three quarters of 2015, the vacancy rate stood at 9.5 percent, representing a drop of 30 basis points from the same period in 2014, 130 basis points down from the peak in 2010.
  • Notable Highs in Construction: Over the last several years, the square footage of medical space under construction has been restrained. However, new medical office construction is expected to surpass 38.0 MSF by year-end, with a total value of $18.3 billion.
  • Retail Clinics Projected to Double: Healthcare systems are attracted to the lower costs associated with operating in existing real estate footprints and keeping minor medical issues out of expensive emergency departments. A study by Accenture finds the number of retail clinics is projected to nearly double from 1,418 in 2012 to 2,805 in 2017.

For more details, Colliers International’s 2016 Healthcare Marketplace research report is available for download at

About Colliers International Group  Inc.
Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant inside ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals‘ Global Outsourcing for 10 consecutive years, more than any other real estate services  firm.

For the latest news from Colliers International, visit or follow us on Twitter: @Colliers and  LinkedIn.

SOURCE Colliers International Group  Inc.

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