The growth in healthcare employment—95% since 1990—has driven increasing absorption of medical office space, while investor demand for healthcare properties is expected to remain solid. In particular, private investors' stake in the sector reached an all-time high in 2016. Robert Bach, NGKF's national director, market analytics, prepared the report along with Garth Hogan and Todd Perman, both executive managing directors with the Global Healthcare Services group.

NEW YORK CITY—Uncertainty over legislation that may or may not replace the Affordable Care Act hasn't dimmed investor enthusiasm for healthcare properties, says Newmark Grubb Knight Frank. In its latest Healthcare Outlook report, the firm's Global Healthcare Services group says that demand for investment remains at an all-time high, with 2016 volume coming in just below the record $11.6 billion that traded in 2015, and notes that pending Congressional action is just one of several forces at work in the sector.

“Lost in the high-decibel debate” over ACA repeal are “other disruptors changing the healthcare industry and, by extension, the outlook for medical office buildings and other health care properties,” according to NGKF's report. It cites recent reports from the Healthcare Financial Management Association that group these disruptors into four categories: a transition to value, consumerism, consolidation and transformative innovation. All four have an ongoing impact on the need for capital and the demand for change in healthcare real estate.

Yet amid these disruptors, healthcare property markets have maintained their stride, from the standpoint of both investment and occupancy, and the NGKF report offers reasons why. One is demographics: “The aging of the US population is the primary driver of demand for health care products and services, which generates rapid employment growth and occupier demand for health care real estate,” the report states. And although seniors ages 65 and older comprised just 14.9% of the US population in '15, they'll account for 19.0% by 2025, with the absolute number increasing from 47.8 million to 65.9 million.

Similarly, the US Bureau of Labor Statistics projects that the two fastest-growing occupations from 2014 to 2024 will be healthcare/tech practitioners and healthcare support. Between them, these two occupations are expected to add 2.3 million new positions and account for nearly 25% of all new jobs created during this 10-year period.

The growth in healthcare employment—95% since 1990—has driven increasing absorption of medical office space, while investor demand for healthcare properties is expected to remain solid. In particular, private investors' stake in the sector reached an all-time high in 2016. Robert Bach, NGKF's national director, market analytics, prepared the report along with Garth Hogan and Todd Perman, both executive managing directors with the Global Healthcare Services group.