The Fourth Quarter 2009 REAL Capital Report on Medical Office Buildings reveals some interesting trends and backs up what has been reported for the past year. For 2009 verses 2008 Medical Office Building (MOB) sales volume declined by 63%. The average price per square foot was down by -6% however by some measurements up by 9%. This compares to traditional office properties which were down by -71% in sales volume and down by a massive -26% in average prices per square foot. The percent asking price to achieved price was approximately 89% for both type properties.Capitalization (CAP) rates, an indicator of value based on Net Operating Income (NOI) and perceived risk has been rising for the past few years. The higher the CAP rate, the less an investor will pay for the same NOI. Average CAP rates for MOBs were up to 8.1% or 92 bases points in 2009 over 2008. Average CAP rates for office properties at 8.3% are up a dramatic 240 basis point during the same period. Our interpretation is that traditional office properties are perceived, on average as a much riskier investment then medical office buildings.
There are several other interesting trends however in summary medical office buildings are performing far better than other classes of commercial real estate assets.
For a complete report of supporting data and/or request a market study for areas not yet reported on this blog please give us a call or email Richard Smith, CCIM. We can also provide complete full market research studies including demographics, available spaces, lease rates, operating expenses, investment analysis, sales comparables and tenant rosters of medical office buildings in Atlanta across the Southeast Region. We work with health care professionals evaluating real estate options. Good health in 2010.
