The 2025 GlobeSt. Healthcare Commercial Real Estate Conference in Scottsdale brought together many of the industry’s most respected voices, from health system executives and lenders to national brokerage leaders and developers. Their insights painted a clear picture of where medical real estate is heading and how investors, providers, and developers can strategically position themselves in the years ahead.
1. State of the Industry: A Sector That Continues to Outperform
The conference opened with the State of the Industry panel featuring:
- John Chang, Senior Vice President at Marcus & Millichap
- Chris Bodnar, Vice Chair at CBRE
- Darryl Freling, Managing Principal at MedProperties
- Steven Reedy, Managing Director at First Citizens Bank
- Kyle Arnold, Senior Managing Director at Newmark
- Jon Buehner, Senior Vice President at Capital One
These leaders highlighted the healthcare sector’s remarkable stability and continued growth, despite broader economic volatility. Capital markets are loosening, employment demand is soaring, and demographic changes are accelerating the need for medical services.
One of the most referenced themes was the contrast between medical office and traditional office performance. While traditional offices continue to struggle, medical offices have remained one of the most stable property types nationwide.
- Traditional office vacancies sit near 15.9%,
- Medical office remains steady around 9%, even through economic cycles.
This stability continues to draw investors toward medical assets as a reliable hedge against market fluctuations.
2. Healthcare Systems Insight: Real Estate Needs Are Shifting
Another key session, Through the Lens of Healthcare Systems, featured:
- Ross Caulum, Regional Real Estate Director at Trinity Health
- Murray Wolf, Publisher of Healthcare Real Estate Insights
They reinforced that health systems are under mounting pressure, from workforce shortages to rising expenses, but remain committed to expanding outpatient, ambulatory, and community-based care models.
Systems continue to reduce inpatient footprints and pursue flexible real estate strategies that support faster, lower-cost, and more convenient care delivery.
3. Employment Trends: Healthcare Continues to Drive U.S. Job Growth
Healthcare remains the country’s dominant source of new jobs. Panelists shared data showing that since May:
- Nearly 200,000 out of 700,000 total new jobs came from healthcare
- Wage growth for nurses and clinical support staff is outpacing the national average
- Job creation is expected to reach 900,000 new positions in 2025
According to the projection:
- Healthcare will account for 40% of all new jobs created from 2024–2034
- Over 2 million new healthcare workers will be needed
- Nurse practitioners, medical managers, physical therapist assistants, and psychiatric technicians lead the growth list
These workforce realities directly influence space requirements for medical facilities and outpatient centers.
4. Demographic Trends: The Aging Population Is Reshaping Demand
Perhaps the most eye-opening statistic shared at the conference is this:
11,000 Americans turn 65 every day.
And this trend will continue for decades.
- People aged 65+ average 7.1 office-based physician visits per year, far higher than all other age groups
- The 65+ population will grow by 14 million people by 2035
- This represents a 24% increase in just 10 years
- Resulting in 80 million additional medical visits annually
Sun Belt states, especially Arizona, are positioned to see the largest surge in demand. Phoenix, already one of the fastest-growing metros in the country, stands out as a long-term winner in healthcare real estate absorption.
5. Federal Reserve Outlook and Economic Conditions
Economists at the event expect rate cuts to begin in December, followed by an additional 50–100 basis points of easing during 2026. Even with moderation, long-term borrowing costs are expected to remain in the 4%–5% range.
Despite some uncertainty surrounding the Federal Reserve’s future structure and authority, capital markets are showing renewed confidence. As a result:
- Loan spreads have tightened to 175–250 bps
- Construction financing for top-tier medical projects is available under 5%
- Life companies, regional banks, and private credit groups are actively lending again
- SOFR-based floating rates are near 3.8%
Lenders repeatedly emphasized their strong appetite for medical assets due to consistent performance and recession-resistant fundamentals.
6. Tight Construction Pipeline: More Demand Than Supply
One of the most impactful data points shared was the dramatic decline in new medical office construction:
- 78% decline in new medical construction starts
- 42% decline in traditional office construction
Labor shortages, tariffs (some up to 50%), and elevated material costs have made development more challenging. However, with vacancies at historic lows and demand accelerating, the long-term need for new healthcare facilities is undeniable.
Developers are now prioritizing:
- Flexible, adaptable building designs
- Prototype and modular building solutions
- Mixed-use medical campuses with retail, hospitality, and multifamily components
- Early general contractor involvement to manage costs and schedule risk
7. Outpatient Growth and Hospital Margin Pressure
Hospitals across the country are experiencing vastly different financial outcomes:
- Large urban hospitals report 23%–31% operating margins
- Rural hospitals face shrinking margins and a 40% risk of closure
Because commercial insurance reimbursement far exceeds government programs, systems are making deliberate efforts to shift more procedures to outpatient settings.
Today:
65%–70% of all surgeries are performed outpatient, and this share continues to grow.
This shift drives demand for:
- Ambulatory surgery centers (ASCs)
- Freestanding emergency departments
- Micro-hospitals
- Diagnostic and imaging centers
Real estate strategies must support faster patient throughput, flexible layouts, and lower regulatory overhead.
8. Technology and Digital Infrastructure: The New Standard
Technology-enabled care is no longer optional. Telehealth now accounts for 25%–35% of patient engagements, and healthcare facilities must adapt accordingly.
Modern medical buildings now require:
- Strong digital connectivity
- Telehealth-ready exam rooms
- IoT-enabled building systems
- Space for advanced diagnostic equipment
Health systems are transforming into hybrid digital-and-physical care platforms—and their real estate must evolve with them.
9. Outlook for 2026: Momentum Building Across All Healthcare Asset Types
Panelists expressed a strong and consistent outlook for the next two years. Key expectations include:
- Transaction volume doubling in 2025
- Continued rent growth in medical office
- Increased sale-leaseback activity as providers seek capital
- Strong absorption in fast-growing markets like Arizona
- Stabilizing cap rates around 7.5%
The message was clear: Healthcare real estate remains one of the most resilient, opportunity-rich sectors in commercial real estate.
Looking Ahead
With demographic trends accelerating, construction pipelines tightening, and capital markets re-engaging, the years ahead present strong opportunities for investors, developers, and healthcare providers. Whether you’re exploring acquisitions, planning a new development, evaluating a sale-leaseback, or repositioning an existing asset, this is a pivotal time to act.
The ICRE Investment Team continues to support medical providers and investors across Arizona with deep market knowledge, hands-on strategy, and a forward-looking understanding of where healthcare real estate is headed.
