**Insights into the Evolving Healthcare Real Estate Market: A Conversation with ERE Healthcare’s Collin Hart**
At this year’s Connect Healthcare Real Estate 2025 conference, taking place October 14–15 at the Hyatt Regency Irvine, one of the key sessions will feature a conversation between ERE Healthcare Real Estate Advisors CEO and Managing Partner Collin Hart and Revista’s Stephen Lindsey. Hart, whose firm specializes in advising physician groups in structuring sale-and-leaseback deals, shared his thoughts on the current market climate, investor sentiment, and the trends shaping the future of healthcare real estate.
### Sale-and-Leasebacks: A Strategy for Liquidity and Transition
According to Hart, sale-and-leaseback transactions remain a reliable exit strategy for physicians looking to unlock liquidity from their real estate holdings without disrupting their operations.
“This doesn’t mean the practice or ambulatory surgery center (ASC) is going away,” Hart explains. “But changes in leadership, control, or partnership dynamics often make it logical to transition ownership of the real estate to a third party.”
Even amid tighter capital markets and higher interest rates, Hart notes that the appetite for these deals remains steady. Continuing consolidation in the healthcare space and changes in investment risk profiles have encouraged physician groups to consider these transactions more seriously.
While market timing can influence value, Hart advises clients to prioritize controllable factors like career timelines, partnership structure, and lease terms. Investors typically favor long-term (10+ year), triple-net leases with annual rent escalations of 2–3%, and stable clinic operations with diversified provider coverage.
Hart underscores the importance of creative structuring. “These are nuanced deals with bold personalities and preferences. Come to the negotiating table with an open mind.”
### Where Investor Interest is Headed
When asked where investors are focusing their capital, Hart pointed to strong demand for properties housing surgical specialties, particularly those with an onsite ASC.
“This is driven by the shift of healthcare delivery to outpatient settings. It provides better outcomes at a lower cost,” Hart remarks. “Surgery centers also create highly captive tenancy due to the cost and complexity of building them out.”
He predicts that investor interest in such properties will remain strong—and possibly increase—as debt costs decline over the next year or so.
### Adaptive Reuse: Promise and Pitfalls
Adaptive reuse of non-medical buildings—such as converting offices into medical facilities—is gaining attention as a way to address high construction and land costs. Hart agrees that it’s attractive in theory, but the economics must pencil out.
“To make the numbers work, the acquisition cost of the building has to be relatively low, especially since medical tenant improvement costs are high,” he cautions. “Even buildings fully built out for office use often need to be gutted and rebuilt to meet medical specifications, with clinical buildouts running $175 to $250 per square foot—double that or more for an ASC.”
He stresses the importance of careful due diligence on the building’s infrastructure, including capacity for water, electricity, and compliance with fire/life safety requirements. In many cases, these upgrades can offset the cost advantage of reuse and even make ground-up builds a better option.
### Navigating Risks and Opportunities
As the industry landscape shifts, Hart says the big picture remains favorable. However, several headwinds and trends are reshaping how and where care is delivered—and thus how investors evaluate opportunities.
“Pressure on reimbursements continues to push services to outpatient settings. Telehealth has grown in importance, often reducing the space requirements for some practices. Meanwhile, regulatory changes are generally more navigable for larger systems than smaller independents,” Hart says.
Despite these evolving dynamics, Hart remains optimistic. “Everyone needs healthcare, and that translates into consistent demand for spaces to deliver care. The fundamentals remain sound.”
His advice to investors: focus on macro trends and operational fundamentals to source sound opportunities. ERE Healthcare remains focused on advising physicians and their partners—corporate or hospital—on maximizing the value and efficiency of their real estate holdings.
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For those interested in exploring the future of healthcare real estate—including investment trends in medical office space, FSEDs, urgent care, ASCs and more—Connect Healthcare Real Estate 2025 will offer valuable insights from industry leaders. Join the conversation this October in Irvine.
