Is medical office boom headed toward bust?

The boom in medical office construction may be overheated and lead to a bubble, reported Law360.

During the third quarter, more than half of office square footage currently under construction in the United States is medical-office related. But more recent data suggested the figure is now closer to 24 percent, suggesting a cooldown in demand, according to the article.

"Whether this implies that the sector is overbuilt is a question being considered by those lending and investing in the medical space," states a report by Colliers International. The reported added that concerns about the Affordable Care Act could be impacting new groundbreakings.

However, a Colliers executive who was not involved in the writing of the report was far more bullish, saying the overbuilding concerns are unfounded.

"Across the U.S., this is a sign of only things to come," John Wadsworth, head of Colliers' healthcare services group, told Law360.

For instance, although the real estate market in Las Vegas was battered in the Great Recession, medical office construction is expected to surge in the coming years, according to the Las Vegas Review-Journal.

And Richard Bezold, chair of the Akerman Senterfitt real estate group, expects the ACA will actually spur more demand, he told Law360.

To learn more:
- here's the Law360 article (subscription required)
- check out the Colliers International report (.pdf)
- read the Review-Journal article

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