The healthcare real estate sector is at a pivotal moment as macroeconomic factors shape investment trends and capital deployment strategies for 2025 and beyond. Healthcare executives must navigate a complex landscape, influenced by economic growth, interest rate policies, demographic shifts, and evolving financing strategies. As the demand for healthcare services continues to rise, understanding these influences is critical to making informed real estate investment decisions.
The Impact of Economic Growth on Healthcare Real Estate
The overall economic climate significantly influences the healthcare real estate sector. In early 2025, U.S. GDP continues to grow at an annual rate of 2.3%, fueling employment and disposable income levels. This economic expansion supports the need for additional healthcare facilities, including hospitals, outpatient centers, and specialized medical buildings.
As economic growth stabilizes, healthcare providers are seeing increased patient volumes, requiring additional space to meet demand. This creates opportunities for strategic investments in medical office buildings (MOBs), senior living communities, and other healthcare-focused real estate assets.
Interest Rates and Capital Costs
Interest rates are one of the most significant factors affecting healthcare real estate investment. The Federal Reserve has signaled a cautious approach to rate cuts, citing inflation risks. Current projections suggest 50 basis points (bps) of rate reductions in 2025, with another 50 bps expected in 2026.
Although 2024 saw liquidity constraints due to tighter debt markets, the outlook for 2025 is improving, with lenders becoming more active. Loan origination volume increased by 7.4% year-over-year (YOY) across major lender groups, signaling a turnaround in lending availability. However, healthcare real estate lending, while nearly doubling in 2024, still lags behind the 2017-2019 average by 20%.
For healthcare providers looking to finance new developments, these trends suggest that while borrowing conditions are improving, securing capital at favorable terms will remain competitive.
Inflation and Construction Costs
Inflation continues to play a crucial role in healthcare real estate development, particularly regarding construction costs. In 2024, inflation peaked at 5.1%, increasing the cost of building materials and labor. However, in 2025, inflation has moderated to 3.2%, providing some relief to developers.
Key materials like steel have dropped in price by 15% from 2024 highs, helping to reduce construction expenses. Nevertheless, new healthcare facilities remain costly, and securing the right development partner and financing structure is essential to maintaining project feasibility.
The Growing Demand for Healthcare Facilities
Demographic shifts are a major driver of demand in healthcare real estate. The U.S. population aged 65 and older is projected to reach 20% by 2030, up from 16% in 2020. This growth is increasing demand for senior healthcare services, outpatient clinics, and long-term care facilities.
Healthcare real estate investors and developers are responding by focusing on ambulatory surgery centers (ASCs), medical office buildings (MOBs), and specialized care facilities that cater to an aging population.
Capital Markets and Investment Trends
The state of capital markets significantly impacts healthcare real estate investment activity. In 2024, transaction volume in the MOB sector surged 61% YOY, reflecting renewed investor confidence. This momentum is expected to continue in 2025, driven by improving capital market conditions and growing demand for healthcare real estate assets.
Healthcare real estate pricing has also rebounded. As of November 2024, national commercial real estate pricing was down only 0.5% YOY, a significant improvement from the 7.4% decline recorded in November 2023. MOB pricing increased 4% YOY on a price-per-square-foot (psf) basis, and further stabilization is expected in 2025.
Cap rates have adjusted to reflect higher borrowing costs, with MOB cap rates increasing by an average of 159 bps from their 2022 lows. However, expected net operating income (NOI) growth and interest rate cuts should help stabilize cap rates in 2025.
Healthcare Real Estate Cap Rates vs. Other Commercial Real Estate
Medical office buildings (MOBs) continue to demonstrate strong investment fundamentals compared to other commercial real estate sectors. According to CBRE:
- MOB cap rates averaged 6.9% in early 2025, showing the first quarterly decrease since Q2 2022.
- Office property cap rates increased to 7.8%, reflecting ongoing distress in traditional office space.
For health systems seeking expansion, these cap rate trends indicate that MOBs remain a relatively stable investment. As other commercial sectors face volatility, healthcare real estate continues to attract investors due to its strong tenant demand and long-term lease structures.
Unlocking Capital Through Developer Partnerships
For health systems looking to expand, access to capital is a critical factor. Partnering with a developer like Boldt Real Estate can provide low-cost, convenient financing solutions that support growth, renovation, and innovation. Competitive rental rates
How Developers Help Health Systems Secure Capital
- Financial Expertise & Strategic Planning: Healthcare developers understand the financial nuances of real estate investment and can help optimize capital allocation, ensuring projects align with financial goals.
- Risk Mitigation & Cost Control: Developers bring experience in managing financial risks, preventing cost overruns, and streamlining project execution.
- Access to Diverse Funding Sources: Developers have established relationships with lenders, institutional investors, and private capital sources, allowing health systems to explore tailored funding solutions.
- Efficient Project Execution: Partnering with a developer ensures that projects are completed on time and within budget, allowing health systems to begin generating revenue sooner.
By leveraging a developer’s financial acumen, health systems can focus on delivering quality healthcare while ensuring capital is deployed efficiently.
Conclusion: The Future of Healthcare Real Estate Investment
As we move through 2025, the healthcare real estate market remains resilient despite broader economic uncertainties. Key takeaways include:
- Transaction volume is increasing, with MOB sales up 61% YOY in 2024.
- Cap rates for MOBs are stable at 6.9%, offering a solid investment alternative.
- Developer partnerships unlock capital and reduce financial risk, allowing health systems to expand strategically.
In a time of economic transition, healthcare executives must stay ahead of investment trends. By leveraging strong market fundamentals, new financing options, and strategic developer relationships, health systems can secure the capital needed to expand, innovate, and provide better care to their communities.
Why Work with Boldt?
Boldt Real Estate offers a low-cost and convenient approach to real estate development, helping health systems optimize capital deployment while maintaining financial stability. Here are a few things that set us apart:
- Long-Term Ownership Commitment: Ensuring real estate stability for decades, allowing health systems to focus on patient care without real estate volatility.
- Flexible Financing Options: Creative, personalized solutions to meet your organization’s specific needs.
- Real Estate Tax Abatement: Reduce expenses to free up mission-critical investments.
- No Property Management Fees: Lower overhead costs while maintaining full control of your facilities.
- Off-Balance Sheet Leasing: Structuring leases under FASB Topic 842 to optimize financial reporting.
By partnering with Boldt, your health system can unlock capital, reduce financial risk, and ensure long-term real estate success. We invest in your success, ensuring your facilities remain optimized, cost-efficient, and aligned with evolving healthcare delivery needs.
Get in touch today to explore how Boldt can help you achieve your strategic real estate goals.
