CREJ

Page 4 — Health Care & Life Sciences Quarterly — April 2022 www.crej.com HEALTH CARE 1501 W. Mineral Ave. Medical Office Newly Renovated! Littleton, Colorado Class A MOB Opportunity Located in Southeast Littleton, 1501 W. Mineral Ave. provides close proximity to some of the region’s leading hospitals, including Littleton Adventist Hospital, UC Health and Children’s Hospital Colorado. Anchored by Colorado Eye Consultants/ Corneal Consultants of Colorado , this two- story Class A building is ideal for medical offices of all sizes. • Up to 20,000 SF for lease • Flexible floor plans • Highly visible signage • ADA compliant, full sprinkler system, updated HVAC and full building water filtration For inquiries, please contact: Dann Burke, CCIM (720) 528-6362 | daniel.burke@cbre.com Stephani Gaskins ( 720) 528-6346 | stephani.gaskins@cbre.com 1501 W. MINERAL AVE. COUNTY LINE RD. MINERAL AVE. S. BROADWAY T he U.S. health care delivery system has undergone sig- nificant change over the past decade, as the baby boomer generation enters retirement, the U.S. population continues to age, health care spending continues to rise, and major hospital systems have shifted patient care toward more efficient and convenient off- campus medical office buildings. These national trends also are occurring in Colorado, particularly in larger cities such as Denver. According to medical office research from Revista, the Denver-Aurora- Lakewood market realized positive absorption of 491,000 square feet in the fourth quarter, compared to construction deliveries of 399,000 sf, bringing overall market occupancy up to 90%. Sales volume increased 30% year over year in the fourth quarter compared with the third quarter, totaling $323 million. Medical office properties histori- cally have been well occupied when compared to traditional office, and at the moment, supply is tempered in many markets. Overall, this asset class is considered recession resis- tant, due in part to the significant demand for health care services, the moderated supply and the “sticky” nature of the tenant base. Population dynamics is a signifi- cant factor in health care demand and one of the most important investment criteria that our firm considers. The U.S population is aging at an increasing rate, with the median age rising from 33 to 38 since 1990. In 2020, 17% of the population was over the age of 65, and that percent- age is expected to grow to 20% by 2030 and 25% by 2060. When con- sidering that the 65-plus age cohort averages twice as many physician visits as other age cohorts, this aging population dynam- ic should provide a greater demand for health care services, including outpatient services conducted in medical office settings that often are more convenient and less costly. Investors are focused on the medical office sector in Denver and other markets due to the dynam- ics of an aging population with increased health care needs. The health care real estate sector is among the largest components of gross domestic product and is pro- jected to grow from 18% to nearly 20% by 2028. The space needed for health care, ranging from physi- cian practices to laboratory space, is expected to grow by 16% by 2030. Another key consideration is the potential for long-term growth. This can be realized by buying in established or emerging growth cor- ridors coupled with opportunities to modernize assets and enhance their potential for rent growth. The recently established Laramar Medi- cal Properties Fund I, for example, is focused on securing well-located medical office assets that are aligned with dominant regional health care providers and have the potential for property enhancement and additional leasing. A review of recent statistics on medical office sales shows notable sales growth nationally – and in the Denver market. Overall U.S. medical office investment activity totaled $17.4 billion in 2021, including a record $6.6 billion in the fourth quarter. Annual sales activity for 2021 represents a 49% increase from 2020, which totaled $11.7 bil- lion. A national review of medical office outpatient facilities showed a combined value of nearly $500 bil- lion, which includes 1.6 billion sf of space across 37,000 properties, according to Revista. The Denver market is home to top health care providers such as Anthem Blue Cross Blue Shield, United Healthcare, UCHealth and Aetna Health, which rely on net- works of off-campus physicians groups and specialty surgery cen- ters to support their patients. Den- ver also has a strong population growth story, a trend that started before the pandemic and is expect- ed to continue. Denver County, with a popula- tion of 715,522, has added nearly 160,000 new residents since 2010, an increase of 27%. Much of this population expansion is due to the area’s favorable business cli- mate, access to year-round outdoor activities, and proximity to leading ski resorts and other recreational venues. Other Colorado cities, such as Colorado Springs, Fort Collins and Arvada, also have experienced double-digit population growth in recent years. The medical office market is pro- jected to see strong growth for the foreseeable future, resulting from the aging U.S. population, rising health care spending and shifting patient care toward more conve- nient off-campus medical office buildings. Given the moderated supply of new product coming onto the market, investors may expect to see notable leasing and investment opportunities for the foreseeable future. s bslad@laramargroup.com Population dynamics driveMOB investor demand Ben Slad Senior vice president of investments, Laramar Group The space needed for health care, ranging from physician practices to laboratory space, is expected to grow by 16% by 2030.