Healthcare experts nationwide descended on sunny Orlando in May for the 2024 BOMA International Medical Real Estate Conference. With strong attendance and an optimistic atmosphere, this year’s event was a resounding success. Despite some industry challenges, the overall sentiment was positive.

The annual meeting brings together a cross-section of healthcare real estate, from investors and developers to operators and health systems executives, to explore the complexities of the ever-evolving sector.

This year’s conference was no different, and attendees had the distinct privilege of hearing from several leading experts and industry voices who represent all facets of the field to help navigate challenges and multiply opportunities for success.

Capital Markets as a Cautionary Tale

As anticipated, capital markets remained a big topic of conversation and a cautionary tale throughout the conference as healthcare transaction volumes remain low. However there is an expectation that we may see an increase in volume later this year and into 2025.

This optimism, however, is contingent on interest rate movements. One encouraging sign is that bid-ask spreads have narrowed. This indicates that market tensions may potentially ease in the coming months, but financing challenges will likely persist.

Cost Management and Revenue Strategies

It was no surprise that many sessions and panels centered around how providers can achieve enhanced cost management as many health systems are battling shrinking margins. There is a concerted effort among physician tenants, executives, and providers to reduce operating expenses and better manage costs.

On the other hand, third-party owners and landlords are concentrating on boosting rental revenue, a dichotomy that illustrates the existing pressure between providers and investors. In an effort to bridge the gap, both parties are focusing on space utilization strategies. Providers are keen on occupying space more efficiently to reduce rental costs, even if it means paying slightly higher rates for fewer square feet.

This challenging cost environment has opened the door for service providers to partner with providers in new ways on their real estate strategy and ensure optimal lease terms and space utilization.

Resilience of Healthcare Real Estate

Despite the challenges we’re witnessing with capital markets, leasing activity has remained active. Healthcare real estate continues to demonstrate its resilience as an asset class, particularly in today’s inflationary environment, and the sector stands out as a reliable investment compared to other asset classes.

Overall, the 2024 Medical Real Estate Conference from BOMA International unpacked the ongoing adjustments and strategic shifts within the medical real estate sector. While there are hurdles, the prevailing mood of optimism reflects a belief in the sector’s ability to adapt and thrive in the current economic landscape.