The Value of Specialized Healthcare Real Estate Expertise

By Erik Hill, MAI, CRE, CCIM, MRICS, Managing Director

Healthcare real estate assets are as unique as the patients they serve. They can be, and most often are, highly specialized buildings designed to support optimal patient outcomes.

Whether it is a hospital, medical outpatient building, surgery center, or rehabilitation facility, these complex buildings are best served by real estate professionals who specialize in healthcare real estate.


Brokers: When it comes to the sales and leasing of a healthcare asset, having a real estate broker that understands a good medical tenant mix, knows what tenants/users are looking for in a building, and the potential patient origins for the property can greatly improve the chances for success for the asset. Healthcare brokers often have relationships with other healthcare professionals in the local market and across the country. This network of healthcare-focused professionals enhances the broker’s ability to identify and connect with the right buyer, seller, or tenant for your healthcare asset.


Property Managers: Operating and managing a healthcare property can be highly complex. For many healthcare assets, there can be extra layers that a property manager needs to be able to navigate to ensure the smooth operation of the building. Some of these healthcare-specific considerations include regulatory and compliance requirements such as OSHA, HIPAA, and the Joint Commission.

Additionally, the asset is likely to have specialized components depending on the type of tenants within the building. These can include medical gas, imaging equipment with shielding, back-up generators, oversized elevators, specialized HVAC, etc. Medical practices often have long or unconventional hours which require property managers to provide responsive, 24/7 maintenance availability. If repair work needs to take place within the building, great care must be taken not to disturb the tenants or their patients, which often requires the work to be done after hours or overnight.


Developers: Bringing a new healthcare asset out of the ground or renovating an existing structure can be very challenging. Using a developer that is well versed in the type of healthcare asset you’re constructing can be the difference between staying on budget and diving deep into the red. Healthcare developers can be local, regional, or national and many have developed a specialization in certain healthcare property types. Healthcare developers often utilize specific sub-contractors that have deep healthcare experience that can help identify issues and resolve them in a timely manner to keep a project on track.


Due Diligence Professionals: Healthcare properties can be unique in their construction and may contain highly specialized systems for the operation of the facility. When a property condition assessment is required as part of a transaction or when needed for capital budget planning, utilizing a due diligence professional who is familiar with healthcare assets and their unique construction can save time and money. Those who are well versed in the healthcare space can more accurately estimate the cost and timing associated with the complex components of healthcare assets. These items may include in-wall medical gas, specialized HVAC, water treatment/testing, shielding, refrigeration systems, vacuum suction equipment, etc.


Appraisers: As healthcare assets are a specialized subset of the commercial real estate industry, there are lenders, brokers, investors, and developers who are dedicated only to this property type. Additionally, there are valuation professionals that are dedicated to this space as well.

Understanding how these properties are marketed, constructed, transacted, and financed is critical to understanding the value of these unique properties. For example, a medical office building should not be compared to a general office building, and an in-patient behavioral facility should not be compared to a seniors housing facility. There are nuances to each healthcare asset type and using a healthcare valuation professional will help ensure the asset is accurately analyzed based on the market metrics for that specific asset type.

For information on our specialty healthcare appraisal team, our healthcare due diligence team, or recommendations for other healthcare specialists, please contact Erik Hill at Partner Valuation Advisors.

Erik Hill, MAI, CRE, CCIM, MRICS
Managing Director - National Healthcare and Life Science Lead
Partner Valuation Advisors
[email protected]
214-234-9566

Hospitals Lead the Charge: Investor Confidence Grows in Healthcare Assets

By: Erik Hill, MAI, CRE, CCIM, MRICS
September 23, 2025

As the broader commercial real estate market continues to navigate economic headwinds, the healthcare sector has quietly charted a course of resilience and growth. While other asset classes grapple with volatility, healthcare real estate has demonstrated a unique ability to adapt, driven by rising demand, strategic investor interest, and a shifting landscape of care delivery.

In the second quarter of 2025, one of the most notable trends in healthcare real estate was the continued decline in new construction volume. At the same time, absorption rates increased, pushing national occupancy averages above 92%. This dynamic created a tightening market, where existing facilities saw increased utilization and investor interest.

Hospitals and health systems, along with private investors, emerged as the dominant buyers in the sector during the first half of the year. In contrast, REIT activity was relatively muted—a departure from previous years when institutional capital played a more prominent role. This shift underscored a growing confidence among operators and private capital in the long-term viability of healthcare assets.

From a capital markets perspective, medical office cap rates expanded slightly in Q2 compared to Q1, rising by approximately 10 to 20 basis points. Hospital transaction volume outpaced its historical average, signaling strong investor appetite. Medical office transactions remained somewhat below their historical norms, but the sector showed signs of stabilization.

Interest rates continued to pose a challenge for securing capital, but sentiment shifted. More investors became comfortable operating in a higher-rate environment, recalibrating expectations and deal structures accordingly. Construction costs remain a significant barrier to new supply, with elevated expenses driving up rent rates and making new developments harder to justify.

Despite these challenges, signs of stability have emerged. The inpatient sector experienced steady growth, and behavioral health and substance use treatment facilities attracted increased interest. These specialized assets gained traction as demand for mental health services continued to rise, presenting new opportunities for investors and developers alike.

Looking ahead to the remainder of 2025, the industry is watching closely for continued Fed rate cuts. If rate cuts continue, such a move could unlock transaction volume across all healthcare property types, providing a much-needed boost to deal flow. Additionally, portfolio transactions are anticipated to gain momentum in the second half of the year, with rumors of one or two major deals having circulated among market participants.

In a year marked by uncertainty, healthcare real estate has proven to be a beacon of stability. For investors seeking durable income and long-term growth, the sector continues to offer compelling opportunities—particularly in areas aligned with evolving care models and demographic trends. As 2025 progresses, healthcare assets are positioned to lead the charge in redefining what resilience looks like in commercial real estate.

Looking forward, the healthcare real estate sector is poised to benefit from demographic shifts, evolving care models, and potential monetary policy adjustments. Investors should monitor developments in behavioral health, inpatient care, and portfolio transactions, as these areas are likely to shape the market trajectory through the end of 2025.

About Partner Valuation Advisors

Partner Valuation Advisors, LLC is a national commercial real estate valuation advisory firm that ranks as a top 10 appraisal firm. Partner Valuation Advisors has more than 100 valuation professionals nationally. Partner Valuation Advisors is led by Brandon Nunnink, CFA, and Eric L. Enloe, MAI, CRE, FRICS. Team members hold appraisal licenses in all 50 states and the firm has offices in Austin, Baltimore, Boise, Boston, Buffalo, Charlotte, Chicago, Cincinnati, Cleveland, Dallas, Denver, Gainesville, Grand Rapids, Houston, Indianapolis, Jacksonville, Kansas City, Knoxville, Los Angeles, Miami, Milwaukee, Mobile, Naples, New York, Northern New Jersey, Oklahoma City, Philadelphia, Phoenix, Portland, Raleigh, San Diego, Seattle, St. George, St. Louis, Tulsa, and Washington, D.C. Partner Valuation Advisors performs commercial real estate valuations nationally for investors, lenders, and real estate occupiers and is an affiliate company of Partner Engineering and Science, Inc. Please visit us online at www.PartnerVal.com.