Healthcare practices endure through even the toughest of economic dips. People will always require access to pharmaceutical products and healthcare services, so demand remains consistent regardless of the economic climate. This grants the industry a “recession-proof” status, particularly in light of its performance during the global pandemic, named an essential business and vaccine administrator as we exit the foray. This status means office buildings are a sturdy and low-risk, long-term nnn lease commercial property investment.
The medical industry is experiencing positive demographic trends. As the baby boomer generation approaches retirement age, older population segments are expanding and will continue to do so for the foreseeable future. The population group of 85+ is expected to double in the next 20 years, and the 65+ bracket is forecast to double by the year 2050. Because the healthcare requirements of people within this demographic range are on average higher than the rest of the population, the sector is considered commercially stable for future investment. Triple net lease medical offices for sale add excellent low-risk diversification benefits to any investment portfolio.
Properties
Medical offices are required to be accessible to the public. Many of these properties are located in densely populated areas or close to major intersections and freeways – some that see numbers of up to 90,000 in vehicle traffic per day – as well as malls that attract high foot traffic numbers.
Many of the properties offer an attractive 2-2.5% annual rental increase, which is significantly above the typical commercial real estate investment perks. Lease terms average between ten and twenty years and often come with multiple tenant lease renewal options between five and ten years, best suited to long-term investments.
The average size of buildings is between 6,000-12,000 square ft, and they are typically situated on lots between 0.75-1 acre, providing attractive land appreciation advantages for investors.
The sector boasts a healthy capitalization rate averaging between 4-6%, indicating this asset class is appropriate for investors seeking a strong and stable passive investment term.
Tenants
One of our medical office partners, DaVita Inc., offers thousands of healthcare facilities providing life-saving integrated care to help patients live with and manage kidney disease. The company primarily treats end-stage renal disease (ESRD). With almost 3,000 outpatient dialysis centers in the United States, the company treats over 200,000 patients in America and serves patients of DaVita establishments in ten additional countries.
The company’s consolidated third-quarter financial outcomes in 2021 were recorded as $2.9 billion in revenue. With over 90% of the company’s patients covered by government-based health insurance programs, DaVita saw 68% of its revenue coming from Medicare in 2020, further promoting its stability as a commercial investment property. During the same year, DaVita was ranked 230th company on the Fortune 500.
As aging population trends progress into the foreseeable future, it is expected that this sector will grow and continue to deliver lowered-risk commercial property investment options.
If you are searching for a profitable triple net lease real estate investment option, talk to Buy NNN Properties about medical offices for sale today.
