Banking on Baby Boomers, Part III

Banking on Baby Boomers, Part III
By: Nicholas A. Dunlap

From increased occupancy to rapidly rising rental rates, we have seen the influence of an aging population on the commercial real estate landscape.  Now, we are in the beginning stages of understanding and evaluating the impact that Obamacare will have on Real Estate, both commercial and residential.  Of course, there is a new tax of 3.8% on any income above the capital gains threshold on the sale of real estate, but that’s a different story.

For landlords, with insurance acting as somewhat of a payment plan for those otherwise unable to pay for and receive treatment, this could potential translate as follows: more insured patients, expanding insurance companies taking up bigger offices, doctors seeing more patients and thus requiring additional office space or more offices.  It is too soon to jump to any sort of conclusion on how Obamacare will impact the CRE landscape in it’s entirety, but let’s just say this: it’s not all bad.  So in the meanwhile, please enjoy the third and final portion of my recent Column.

The Benefits of a Diverse Tenant Base

At a time when our economy seems to be coming off of life support and making a slight turn for the better, it is important to also realize the benefits of having a mixed tenant base.   For many small businesses, the downturn saw attorneys, accountants, architects and designers revert to a home office setting.  For medical users, this is not possible.  Thus the diversity is a welcomed safeguard against vacancy if and when the economy should again go awry.     
Very few decisions in life are so easy to make.  Just at look at the public REIT growth in the healthcare sector since 2008 when there were just 10 REITs focusing on medical office.  Today, there are 15 and counting publicly traded companies focusing specifically on health care and medical office. This does not take into consideration the number of private REITs or boutique outfits specializing in the sector.   Position yourself to benefit from the aging population.  After all, it’s just an application, a check and a visit to your local building department away.