Real estate investors snap up medical office buildings as boomers age

As aging baby boomers fuel growing demand for health-care services, investors are increasingly turning their attention to medical office buildings — a niche within the real estate market that some argue is recession proof.

“Doctors are paid by the government in Canada, so they’re pretty secure tenants,” says Huy Lam, a broker at Colliers International who specializes in the health-care real estate space.

Lam says demand for medical office buildings in Canada has been on the rise in recent years — a trend he expects to continue as the number of seniors in the country balloons.

Ownership in the space is fragmented — everyone from institutional investors such as pension funds to real estate investment trusts to wealthy individuals — making it difficult to quantify how much money is flooding in.

However, Colliers forecasts more than $211 million in medical office building sales in Ontario alone this year. That compares with $126 million back in 2011, according to data compiled by the commercial real estate brokerage.

The Canada Pension Plan Investment Board announced in August that it was taking its first steps into the health-care property space, teaming with a U.S. real estate investment trust to invest in a portfolio of medical office buildings in California worth a total of US$449 million.

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