• Medical office sales soared in the first half 2022 at $9.2 billion, drafting off of strong investor interest in 2021.  First half 2022 sales were nearly half of 2021’s record volume of $19.6 billion, an astonishing feat and a clear indicator of the swell of investment capital available to deploy.  Regardless of macro market disruption that started in the spring that is slowing deal velocity, JLL believes that 2022 will be another record year, exceeding even 2021.  The $11 billion merger of Healthcare Realty Trust and Healthcare Trust of America in July 2022 helps guarantee this outcome.  Importantly, however, healthcare investments have been less affected by market conditions, for a variety of reasons, resulting in a later and shallower impact on pricing and appetite than other property sectors.
• The year-over-year comparison of first half sales is easily explained by the accelerated pace of investment activity which occurred over the course of 2021.  Notably,  the momentum of major portfolio transactions (>$300 million) exceeded all historical levels and drove the total sales activity in 2021.  JLL previously reported a record $7.7 billion in portfolio transactions in 2021, nearly half of which featured new entrants seeking to deploy substantial equity checks in an efficient manner.  The timing of first half 2022 volume benefited from commitments made in 2021. 
• However, medical office interest and pricing defied gravity throughout the spring and two to three months longer than other hot property classes.  This phenomenon was due to a combination of unparalleled property sector fundamentals, largely unimpacted by economic and market volatility, and continual support and new loan commitments from commercial banks, which have been the lender of choice in healthcare.  While medical office has not been unaffected by pricing shifts, JLL posits that the pricing adjustments are much less than other preferred asset classes, and new commitments to property acquisitions are providing the needed pricing discovery to bolster investor confidence in the sector.   
• With several large portfolios in stages of closing and the market re-stabilizing, JLL is confident about continued strong investor interest in the healthcare property class.  The growth in demand driven healthcare needs combined with the movement to outpatient care provides ample support for healthy investor appetite for medical office.