Over the past three years, the healthcare sector has continued booming in the net lease investment market. The lucrative and resilient asset class is struck with high demands for premium tenants. Urgent care clinics have become increasingly sought after. Investors are seeking to capitalize from the high growth rates these properties are experiencing.
Urgent Care Upper Hand
The healthcare sector, in general, is highly regarded in the net lease market for its strong and resilient occupiers. Urgent care clinics are quite close to be recession-resistant since they will always be in demand as a better, cost-effective alternative to emergency room visits. Withstanding economic downturns improves credit-worthiness and enhances attractiveness from an investment perspective. We will likely see more facilities popping up in the coming year. The urgent care market’s expected compound annual growth rate between 2022 and 2029 is 5.35%.(Colliers) Investors will start looking for guidance as new supply comes available.
Urgent care clinics make up a unique, yet essential occupier segmentation in the healthcare net lease sector. Since the coronavirus pandemic, service providers offering convenient and accessible care have become indispensable, driving steady demand in the market. The Urgent Care Association reported a 60% increase in patient volume since 2019.(Colliers) Considering additional factors such as aging population and increased health-consciousness ensures a consistent need for these potential tenants.
Analyzing the Market
As urgent care facilities heavily rely on exposure and accessibility for their business performance, there are crucial elements to evaluate prior to investment. The proximity to densely populated markets, location positioning, and visibility directly affect the success of a clinic. Convenience has been a major component for potential patients. Consumers prefer the reliable and fast resources offered by these types of medical centers in comparison to traditional methods. Not only is life expectancy increasing, but an increasing number of Americans are gaining access to health insurance, promoting the use of care centers. This makes clinics more affordable, as well as more attractive, for a wider variety of target audience.
The demand for urgent clinics has surged and many players are looking to get involved. In addition to vertically integrated occupiers such as Walgreens and CVS, other retailers are establishing and acquiring their own healthcare services.4 Notably, one of the net lease stars, Dollar General, has been testing mobile health clinics at its Tennessee locations, providing urgent care services and lab testing. This is allowing for new cross-segmented investment, rather than targeting either retail or healthcare assets.
Conclusion
Net lease investors looking to get involved in the healthcare sector have many opportunities coming their way. Urgent care clinics will continue growing in demand as a resilient asset. Conducting meticulous market analysis, understanding lease terms, and staying attuned to industry trends, investors can rely on professional real estate advisors to help guide them to reach their portfolio goals.
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