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

Why Appraiser‑Prepared FMV Carries More Weight in Healthcare Leasing

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

Healthcare companies must adhere to the Stark Law and the Anti-Kickback Statute (Stark/AKS), especially when related to real estate leases involving healthcare providers. Failure to comply with these federal regulations can result in heavy monetary penalties, jail time, or permanent exclusion from receiving Medicare/Medicaid reimbursements.

When healthcare providers lease real estate to a referral source (i.e. physicians, specialists, or other health systems), the lease rate must be at Fair Market Value (FMV) and have commercially reasonable lease parameters to comply with Stark/AKS. A FMV analysis evaluates the rent a subject property should command in the open market, along with other commercially reasonable lease terms (including, but not limited to, term length, tenant improvement allowance, free rent, etc.). There are two primary sources from which an FMV analysis can be obtained, a real estate broker and a real estate appraiser.

Broker: Typically, a broker will issue a Broker’s Price Opinion (BPO) or a Broker’s Opinion of Value (BOV). The broker will usually offer these reports at no cost or a low cost as a service to an existing client; however, the analysis put into these reports is usually commensurate with the fee charged. Many brokers will use data from various data providers, such as CoStar, Crexi, MLS and their own database. However, most brokers are not calling to verify the accuracy of the data from third party providers, and they are usually not adjusting the comparables based on the attributes of the subject. In many cases, data is pulled from third-party sources and incorporated into a report with limited verification or adjustment. The resulting value range may or may not accurately reflect the fair market value of the subject. Often, a BPO is used as a supporting document to demonstrate that an effort was made to identify fair market value, rather than as a fully substantiated valuation opinion.

Appraiser: An appraiser will either issue an Appraisal or a Fair Market Value/Fair Market Rent analysis. These reports will contain sales and/or lease comparables that have been verified for accuracy and will contain an analysis to properly adjust the comps based on the subject’s attributes, usually resulting in a more accurate value indication. Additionally, these reports will be USPAP compliant, adding an additional layer of quality control, competency, and credibility.

An appraiser’s report is typically more robust and contains more data and analysis than a BPO/BOV. Further, the appraiser is a disinterested third party who has no conflict of interest in providing unbiased FMV.

Risk Tolerance: The choice of which type of report to obtain ultimately comes down to the client’s risk tolerance. A BPO/BOV may provide enough data to satisfy the client’s requirements to comply with Stark/AKS. However, if the client is audited, or if the leases come into question, the BPO/BOV may not have enough data or analysis to support the conclusions. Alternatively, having a report prepared by an Appraiser may be more defensible, as they are prepared with a more thorough, well-supported methodology. Given the steep consequences associated with a Stark/AKS violation, obtaining an FMV report from an appraiser could prevent costly penalties.

Updating Values: In most cases, our clients have elected to receive annual updates on their valuations. Depending on the market in which the asset is located, updating more often (half year or quarterly) may be needed, if the local market is very dynamic. Conversely, if the asset is in a stagnant market, updating on a longer cycle may be sufficient. Ultimately, the client’s risk tolerance and market volatility will dictate the update schedule, but in most cases, an annual update should suffice.

Compliance with Stark Law and the Anti-Kickback Statue is not optional. Non-compliance carries significant financial and operational consequences, making defensible FMV support a critical component of healthcare real estate decision-making. While a BPO/BOV may give general guidance as to the FMV of your healthcare asset, it may also lack sufficient data and analysis to fully support the conclusions. An FMV report from a qualified healthcare appraiser will contain confirmed data that is thoroughly analyzed and adjusted to provide a value that can be relied upon when making healthcare real estate decisions.

For information on obtaining an appraisal or FMV from our specialty healthcare appraisal team, please contact:

Erik Hill, MAI, CRE, CCIM, MRICS
Managing Director - National Healthcare and Life Science Lead
[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.

Partner Valuation Advisors Taps Industry Leader James Graber to Drive South Central Growth

The appointment reinforces Partner’s commitment to institutional excellence and national leadership in CRE valuation

Dallas, TX – September 15, 2025 – Partner Valuation Advisors (Partner) is thrilled to welcome James Graber, MAI, as Senior Managing Director, based in Dallas and supporting the entire South Central Region. This strategic appointment represents a meaningful advancement in Partner’s ongoing expansion and dedication to industry excellence across the region and nationally.

James brings a wealth of experience in commercial real estate valuation, strategic growth, and operational leadership, having held senior roles at two national real estate services firms.

In his most recent role, he served as Chief Operating Officer, where he led the development of a divisional leadership structure, implemented management and technology systems, and expanded alternative asset valuation services—including seniors housing, cost segregation, automotive, manufactured housing, and right-of-way segments.

Prior to serving as COO, James held the position of Managing Director, leading the national Seniors Housing & Healthcare Valuation & Advisory Services group, building a nationally recognized seniors housing group and expanding its reach and capabilities. He was consistently recognized as a top producer, thought leader, and mentor, with published insights in leading industry outlets such as GlobeSt., Senior Housing News, and The Real Deal.

“As demonstrated by their involvement in one in every five transactions across the United States, the scope of the Partner’s reach and influence within the Commercial Real Estate sector is substantial,” said James Graber. “I’m excited to help scale our technology, grow our institutional teams, and bring top talent into a group that’s already making a strong industry impact. Attracting the best and brightest in the industry is a key priority for me, and I look forward to building a team that sets the standard for excellence.”

“James is a powerhouse addition to our leadership team,” said Eric Enloe, MAI, CRE, FRICS, Co-founder and Senior Managing Director. “Partner Valuation Advisors has become a top 10 valuation and advisory firm in just three years. James’ experience in both core and specialty asset classes, combined with his strategic vision and operational rigor, will accelerate our momentum across the region and nationally.”

He will serve as a driving force in growing Partner’s property type teams, including both core and specialty assets, leveraging his institutional expertise and strategic vision to every facet of the business.

Partner views his leadership, insight, and drive as instrumental tools that will help the firm continue to scale and innovate across the South Central Region and beyond.

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.