A confluence of factors is feeding demand for healthcare real estate, including robust domestic demand, related interest from investors outside the U.S. and relatively easy access to capital.

The rapidly ascending ambulatory sector—one of several trends impacting the undulating healthcare real estate landscape—is feeding a booming medical office market. That, in turn, has drawn increased foreign investment and loosened the purse strings on a vast supply of capital that also has fueled construction and mergers and acquisitions.

While foreign investment isn’t yet significant enough to dictate a change in medical office pricing or supply and demand, it could eventually shift market dynamics, said Hunter Beebe, a managing principal at healthcare real estate advisory firm Healthcare Real Estate Capital.

“There is a lot of capital pursuing healthcare real estate beyond foreign—private equity, REITs, domestic—the list goes on,” he said.

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Nearly 38 million square feet of hospital space was under construction in 2018, JLL’s analysis of Revista data shows. That was up from 25.9 million in 2017, 32.5 million in 2016, 27.5 million in 2015 and 21.4 million in 2014.

Since the financial crisis, health systems’ access to capital across the spectrum has virtually been unlimited, said Jeffrey Sahrbeck, a managing director at healthcare financial advisory firm Ponder & Co. This will continue to drive M&A and construction activity, he said.

“Hospitals have been building beds and spending on brick and mortar in advance of baby boomers,” Sahrbeck said.

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