Boomers numbers and demands point to increased demand for medical real estate

Implications: Baby boomers are rapidly aging. According to Census Bureau by 2010 there will be 77 million people aged 55 and older; a number which will grow to a whopping 98 million by 2020. This aging population, living longer with chronic illnesses and more demanding of cafeteria-type service will drive the demand for medical services and more medical real estate into the forseeable future.

Analysis:

 There are several factors at work here. Baby boomers aging and  living longer will need medical care for years to come. Many will be treated for chronic illnesses (which are even now more treatable than previously) while others will be seeking to stay well as long as possible.

Boomers have the reputation of being more demanding in terms of service, quality and convenience. Therefore, medical offices will, for instance, be built in suburbs closer to homes for convenience. Many will be equipped with more conveniences and be more plush and comfortable; as well as less sterile and "clinical". There will be an increasing demand for many, many comfortable facilities. This demand relative to supply will drive up rents in a space where medical rent already exceeds that of  general office space failry significantly.

Constant threats of reduced reimbursement from Medicare will have minimal impact on the appetite for medical care as many boomers will be prepared to pay out of pocket for more cafeteria-style medical services.

Both construction and renovations should continue to grow in an attempt to keep pace with demand. Healthcare REITs should do very well and be a good investment in this climate.