Healthcare Real Estate Transactions
Parkview Health to Build 30-bed Hospital in Lebanon, IN. Parkview Health announced plans to build a full-service hospital and medical office building in Lebanon. The facility is expected to cost approximately $150 million and will be located in Hickory Junction at the intersection of I-65 and State Road 39. The 108,000-square-foot hospital will feature a 24/7 emergency department and inpatient medical, surgical and specialty care. The 30,000-square-foot medical office building will house primary care and specialty care, outpatient diagnostics and a shared employer clinic. The facility is expected to create more than 200 healthcare jobs in Lebanon.
North Dakota Starts Construction on $300 Million Psychiatric Hospital. The state of North Dakota has started construction on a new psychiatric hospital to replace a facility that is more than a century old. The $300 million North Dakota State Hospital in Jamestown is expected to open by the end of 2027, according to the state. The 316,246-square-foot facility is expected to have 140 beds and provide acute mental-health services to patients. Professionals at the new hospital are expected to provide inpatient psychiatric and substance abuse care, forensic services including psychiatric evaluation and restoration and offices for the North Dakota Sex Offender Treatment and Evaluation Program. The original North Dakota State Hospital is still open in Jamestown, but the state only occupies a small portion of the 140-year-old building.
Two Building Portfolio in Highlands Ranch, Colorado Sells. CBRE advised on the sale of Highlands Ranch Medical Campus, a portfolio consisting of 153,858 square feet of medical outpatient buildings (MOBs) in two buildings located at 630 and 640 Plaza Drive in Highlands Ranch, Colorado on behalf of a joint venture between Harbert Management Corporation and Bancroft Capital. The Campus is located in south Denver with significant frontage and visibility on C-470, benefiting from proximity to UCHealth Highlands Ranch Hospital, AdventHealth Littleton, and Children’s Hospital Colorado South Campus. One of the dominant orthopedic groups in Colorado, Panorama Orthopedics and Spine Center, recently executed a new long-term lease for 31,901 square feet, making up over 20% of the net rentable area. Over the last several years, ownership has successfully transitioned the buildings to medical uses as existing office leases expire due to its healthcare-centric location, functional floorplates and competitive healthcare rents.
Healthcare Real Estate Recent Trends
7.3MM Square Feet of Life Sciences Traded Over the Last Year. According to an article from Revista in late August, the first half of 2025 looked similar to the back half of 2024. Across the US, 68 life science properties, totaling 7.3 million square feet, have sold over the past year. Since the start of 2024 we have seen the trailing-twelve-month numbers hover around 7 million square feet for 4 billion dollars. If we compare the activity to the medical office sector, the recent levels are proportionate despite differing fundamentals. Approximately 1.6% of life science square footage, and 1.7% of the medical office square footage has traded hands over the past year. Boston maintains an overrepresentation, with a third of the activity being attributed to it alone. An example of a Boston sale from 2Q25 was the purchase of Burlington BioCenter. As part of a strategic expansion, Northeastern University acquired this 109K sf property from MetLife Investment Management back in May.
MOB Asking Rents to $25.18 PSF, All Time High. According to CBRE, the average asking rental rates in the MOB sector reached a record high in the second quarter (Q2), reaching $25.18 per square foot (PSF), an increase of 0.5 percent over Q1 and a 0.8 percent over Q2 2024. The data comes from the U.S. Healthcare Capital Markets team with CBRE Group Inc. (NYSE: CBRE) and its “U.S. Medical Outpatient Building Q2 2025” report. Other data in the report include: the average MOB capitalization (cap) rate rose 10 basis points from Q1 to 7.4 percent in Q2; the MOB investment volume rose by 32 percent from Q1 to $2.2 billion; and the MOB sector had 507,000 square feet of positive net absorption in Q2.
Pinnacle Real Estate Group Assessment
The Outlook for the Remainder of 2025 Seems Promising. The past couple of years within the Healthcare Real Estate (HRE) industry experienced the downward trends of a bubble on multiple industry indicators created by a variety of factors. Some of these factors, in addition to relatively new ones, the impacts of tariffs and One Big Beautiful Bill Act within the industry, will continue to provide somewhat of a restraint on quick explosive growth, which is probably a positive thing. Generally, most industry and market indicators show a promising forecast for the rest of 2025 with a pending accelerating and positive factor being if and when interest rates drop, which could be as early as mid-September. Even a relatively small decrease in interest rates will positively impact numerous factors within the HRE that could have immediate impact that will be noticed by the end of 2025.
For more information, please contact Director Mike Vandaveer at MVandaveer@AskPHC.com.
