{"id":1004377124,"date":"2019-12-18T11:10:44","date_gmt":"2019-12-18T19:10:44","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004377124"},"modified":"2020-02-14T08:39:17","modified_gmt":"2020-02-14T16:39:17","slug":"why-net-lease-medical-cap-rates-are-compressing","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/","title":{"rendered":"Why Net Lease Medical Cap Rates Are Compressing"},"content":{"rendered":"<div id=\"attachment_1004269202\" style=\"width: 310px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-1004269202\" data-attachment-id=\"1004269202\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/net-lease-retail-office-cap-rates-up-industrial-down\/randy-blankstein-2\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\" data-orig-size=\"800,620\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"Randy Blankstein\" data-image-description=\"&lt;p&gt;Randy Blankstein, president of The Boulder Group&lt;\/p&gt;\n\" data-image-caption=\"&lt;p&gt;Randy Blankstein, President, The Boulder Group. Image courtesy of The Boulder Group&lt;\/p&gt;\n\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg?w=800\" class=\"size-medium wp-image-1004269202\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\" alt=\"Randy Blankstein, president of The Boulder Group\" width=\"300\" height=\"233\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg 800w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg?resize=300,233 300w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg?resize=768,595 768w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><p id=\"caption-attachment-1004269202\" class=\"wp-caption-text\">Randy Blankstein&nbsp;<em> Image courtesy of The Boulder Group<\/em><\/p><\/div>\n<p>Cap rates in the third quarter of 2019 in the single-tenant net lease medical sector decreased by 2 basis points to 6.45 percent when compared to the previous year. The overall net lease market in this time period remained relatively stable, decreasing by only 3 basis points. The supply of net lease medical properties continues to grow as larger hospital systems acquire smaller healthcare groups and one-off physician groups in order to expand their off-campus patient facilities. In the third quarter of 2019, the supply of single tenant medical properties increased by more than 17 percent.<\/p>\n<p>The single-tenant medical sector continues to be in demand with private and institutional investors. However, private investors are more drawn to credit-backed tenants (i.e. Fresenius and hospital system backed leases). Institutional investors are more actively pursuing properties where leases are backed by physician groups, which allow for higher cap rates. Regardless of the strong demand across the board from investors, net lease medical properties were priced at a 10 basis point discount to the overall net lease market. This is primarily attributed to the limited amount of investment-grade tenants in the sector. Only 27 percent of the medical property sector supply was leased to investment grade-rated tenants during the third quarter of 2019.<\/p>\n<p>The medical sector is still one that consumers and service providers typically meet in a face-to-face setting, making this sector largely e-commerce resistant. Additionally, single tenant medical leases frequently possess strong rental escalations throughout the term providing investors with an inflationary hedge.<\/p>\n<p>The single-tenant net lease medical sector will remain active as investors are attracted to the long&#8211;term outlook for healthcare related properties. The sector\u2019s resistance to e-commerce and the country\u2019s aging demographic will keep investor demand high. Investors across all profile types will continue to acquire net lease medical properties as cap rates remain attractive when compared to the overall net lease sector.<\/p>\n<p><em>Randy Blankstein is president of net lease advisory firm <a href=\"https:\/\/bouldergroup.com\/\" target=\"_blank\" rel=\"sponsored\">The Boulder Group<\/a>. <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Only 27 percent of the medical property sector supply was leased to investment grade-rated tenants during the third quarter of 2019, explains Randy Blankstein of The Boulder Group.<\/p>\n","protected":false},"author":1224,"featured_media":1004269202,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21684],"tags":[],"class_list":["post-1004377124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-viewpoint"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Net Lease Medical Cap Rates Are Compressing - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Net Lease Medical Cap Rates Are Compressing\" \/>\n<meta property=\"og:description\" content=\"Only 27 percent of the medical property sector supply was leased to investment grade-rated tenants during the third quarter of 2019, explains Randy Blankstein of The Boulder Group.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-12-18T19:10:44+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-02-14T16:39:17+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Randy Blankstein\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/\",\"name\":\"Why Net Lease Medical Cap Rates Are Compressing - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\",\"datePublished\":\"2019-12-18T19:10:44+00:00\",\"dateModified\":\"2020-02-14T16:39:17+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/f343578fa0947ffe2beaf0d148360706\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/why-net-lease-medical-cap-rates-are-compressing\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Randy-Blankstein.jpg\",\"width\":800,\"height\":620,\"caption\":\"Randy Blankstein, President, The Boulder Group. 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