COVID-19 Presents Unique Challenges to the Healthcare Real Estate Sector
While healthcare real estate has remained more resilient than most other CRE sectors, social distancing and shelter-in-place mandates are impacting a vast number of healthcare professionals.
April 15, 2020 | David Lari, Andrew Fogg, Scott Abrahamson and Michael Polvi | National Real Estate Investor
As the pandemic continues to spread, its impact on medical office buildings (MOBs) is posing a set of challenges unique to this asset class and putting industry players to the test.
It may be expected that within the commercial real estate industry, healthcare real estate assets, and MOBs in particular, would be thriving given the heavy demand on the country’s medical resources in response to COVID-19. Yet MOBs are not immune to COVID-19’s economic effects. While healthcare real estate has remained more resilient than most other commercial real estate sectors, social distancing and shelter-in-place mandates are impacting a vast number of healthcare professionals, as patients refrain from visiting doctors for non-COVID-19 related medical services.
Landlord/Tenant Relationships
Healthcare providers are experiencing sharp decreases and, in certain cases, complete cessation of their revenue stream as elective and non-critical procedures are delayed or cancelled. Still, monthly rents come due. MOB owners should expect to receive tenant notices anticipating inability to pay rent or requesting rent abatement, deferrals or other relief.
