By Jeff Wardon, Jr., Assistant Editor

As outpatient volumes are projected to rise by 10.6 percent over the next five years, healthcare providers are adapting their real estate strategies to meet the growing demand. From shifting services off hospital campuses to investing in purpose-built outpatient facilities, the healthcare sector is evolving rapidly.  

Healthcare Facilities Today spoke with Matthew Coursen, executive managing director, market leader, mid-Atlantic healthcare group at JLL, to discuss the key drivers behind this trend, the stability of medical office investments and how regional dynamics influence outpatient growth as outlined in JLL’s 2025 Medical Outpatient Building Perspective. 

Healthcare Facilities Today: The report highlights a projected 10.6 percent increase in outpatient volumes over the next five years. What key factors are driving this shift, and how are healthcare providers adjusting their real estate strategies to accommodate this demand? 

Matthew Coursen: We’re seeing the baby boomer population is keeping up with what we saw projected a few years ago, and that is that they’re large consumers of healthcare. Their population is also living longer and consuming more healthcare services across the board. 

We've seen the healthcare providers try to meet that demand by extending services out into the community close to where the patients live. This is also while taking as many of those outpatient services off campus as much as possible – things such as cardiology, gastroenterology, orthopedic services and oncology. Those also happen to be the four of the highest projected growth services for outpatient specialty. 

A lot of the specialties that are projected to grow the most over the next five years are really a mix of acuity. So, the oncology services require a little bit more in the way of building construction, medical equipment and requirements. Then you look at some of the other services such as cardiology and orthopedics, those are a bit more standard when it comes to the facilities themselves. However, ambulatory surgery centers are on the rise in terms of construction and demand. 

We’re really seeing the procedural providers from those four groups having a lot of growth and newer facilities, including purpose-built facilities, are what we’re seeing on the horizon. 

Related: Navigating the Healthcare Real Estate Landscape in 2025

HFT: The report suggests that medical office buildings remain a stable asset class for investors. How do current leasing trends and long-term lease agreements influence investor confidence in the healthcare real estate market? 

Coursen: Even though hospitals and health systems have thin operating margins, they tend to have strong long-term financials. We see that while the office market is certainly not a strong place to be for investors, the medical office market is still a strong asset class for them because of the strength of the credit of the occupiers of those tenants. It really all comes down to the length of the lease term and the credit of the tenant. 

We’re seeing that a lot of hospitals and health systems are taking advantage of that and committing to longer-term leases, typically anything out past 10 or 12 years. That can garner the right attention from investors with a strong credit tenant and thereby sort of spread out the risk for the investor on the asset. It has been shown to be helpful, and cap rates are more favorable than they are for the office product. There’s still a very strong interest from investors in medical properties where you’ve got a significant remaining lease term. 

HFT: Sunbelt markets are seeing significant growth in outpatient services, yet regions like Boston and New Jersey remain strong due to established health systems. What factors differentiate high-growth outpatient markets from more mature, stable ones? 

Coursen: The sunbelt markets are experiencing rapid growth because of a population shift. Since the COVID-19 pandemic, a lot of folks left some of the more traditional core east coast and west coast markets for the southern states such as Texas and Florida.  

So, the demand for medical services rose accordingly based on the population shift in more stable markets like New England and the tri-state market. While population growth isn’t projected in those areas, there’s still a tremendous amount of population density and that population is continuing to age and increase their access to care. 

I think the difference between the two is while growth isn’t projected as much, you still have significant population density, and you have a lot of ageing population that’s remaining there and continuing to consume those services. You also still have a high concentration of commercially insured folks with an employee-sponsored health plan that have a choice. 

It’s still a very competitive market for health systems and hospitals. There’s still a lot of consolidation going on there, so you also have market share growth happening for certain health systems. So, the competitive edge is still there and there’s still a lot of population density with a high concentration of commercially insured individuals – that explains why we’re seeing that. 

Jeff Wardon, Jr., is the assistant editor for the facilities market.