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The Post-Pandemic Evolution of Medical Office Buildings: Creative Approaches to Commercial Real Estate

Posted on November 13, 2023

As the healthcare sector adapted to unprecedented challenges in a post-pandemic world, medical tenants and buyers have become more innovative in their approaches to commercial real estate. In this blog post, we will explore the evolving world of medical office buildings (MOB’s) in the post-pandemic era and how medical professionals are getting creative with their locations, designs, and leasing strategies.

1. The Rise of Telehealth

One of the most significant changes in the healthcare sector during the pandemic was the surge in telehealth services. As patients became more accustomed to virtual doctor visits, medical professionals had to rethink their office space requirements. Some MOBs are now offering telehealth suites; There are smaller suites equipped with state-of-the-art technology that enable healthcare providers to conduct remote consultations seamlessly.

The demand for these telehealth suites can influence lease rates and terms. Healthcare providers may be willing to pay a premium for properties equipped with telehealth infrastructure. Landlords can capitalize on this by offering competitive lease rates for spaces with pre-installed telehealth capabilities. Lease terms might also evolve to accommodate the unique needs of healthcare professionals engaged in telehealth services.

Medical office buildings featuring telehealth suites and technology-rich infrastructure may experience higher demand. Investors and healthcare organizations are actively seeking such properties, resulting in increased competition in the commercial real estate market. As a result, property values in these categories may appreciate, making them attractive investment options.

2. Flexible Office Spaces

The pandemic has also brought about a greater need for flexibility in medical office spaces. Many medical tenants are now opting for flexible lease arrangements and shared spaces. Co-working-style MOBs are on the rise, providing smaller practices and specialists with the opportunity to access high-quality facilities without the long-term commitment of traditional leases.

Flexible medical office spaces attract a diverse range of healthcare professionals. This diversity broadens the tenant base and mitigates risks associated with depending on a single, long-term anchor tenant. Flexible medical office spaces may experience more frequent turnover but often have a higher overall occupancy rate, which can be advantageous for property owners.

Landlords may charge a premium for the flexibility offered in these spaces, generating potentially higher revenue per square foot compared to traditional, long-term leases.

3. Retail Integration

In an effort to improve accessibility and patient convenience, some medical tenants are strategically locating themselves in retail centers. By setting up satellite clinics or urgent care facilities within shopping districts, they can tap into existing foot traffic, increased visibility and offer more convenient healthcare options to the public.

Medical tenants in retail centers may influence lease rates. Landlords may charge higher lease rates to medical practices that can benefit from the retail foot traffic. This can lead to increased revenue for property owners.

4. Adaptive Reuse and Mixed-Use Developments

Medical tenants and buyers are increasingly exploring adaptive reuse projects and mixed-use developments. Repurposing older commercial buildings, such as shopping centers or office spaces, allows them to create customized medical facilities in unique locations. These developments often include a blend of medical offices, residential units, retail, and dining options, fostering vibrant communities while providing healthcare services.

Properties within mixed-use complexes featuring medical offices often experience increased demand and property values. These developments are highly sought after by investors and tenants alike, making them attractive assets in the commercial real estate market.

5. Collaborative Partnerships

Collaborative partnerships between healthcare systems and real estate developers have become more prevalent. By working together, they can develop comprehensive medical campuses that offer a wide range of healthcare services in one location. These partnerships facilitate resource sharing and provide patients with an integrated healthcare experience, which is especially valuable in the post-pandemic world.

The post-pandemic medical office building world is evolving, driven by the creative approaches of medical tenants and buyers. From telehealth integration and flexible leasing options to retail integration and collaborative partnerships, medical professionals are adapting to the new normal and reimagining the future of healthcare real estate. This adaptability and innovation not only benefit healthcare providers and their patients but also offer exciting opportunities for commercial real estate developers and investors. As the healthcare industry continues to evolve, the synergy between medical office buildings and innovative commercial real estate strategies promises a bright future for all involved.

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