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**Healthcare Real Estate in 2025: A Year of Two Halves**
At the 2025 Connect Healthcare Real Estate conference in Irvine, industry leaders shared insights suggesting a year marked by contrasting halves for the healthcare real estate sector.
Justin Shepherd, Vice Chairman & Co-Head of U.S. Healthcare Capital Markets at Newmark, captured the sentiment well: “2025 has really been a tale of two halves.” Reflecting on the start of the year, he recalled optimism fueled by expectations of interest rate cuts. “Coming out of January, we were thinking rate cuts then. We obviously didn’t get them as quickly as we expected.”
As the year progressed, market dynamics shifted. “There’s a lot of portfolios on the market, a lot of scale,” Shepherd noted. “You’ve certainly seen the markets respond accordingly. So I think the back half will make up for what our 2025 view was in totality.” He predicted a strong flurry of activity to close out the year, anticipating “a real push” through the end of Q4.
Chris Connell, Principal at Perkins&Will, echoed a similar perspective, emphasizing steady progress despite underlying challenges. “It’s been a fairly steady, positive trajectory that probably belies the slightly rocky road that we’ve had below the surface to get there. There’s been less predictability this year than expected. But all in all, I think we’re coming out of it fairly well.”
From the capital markets standpoint, however, activity remains cautious. Jason L. Signor, Founder and CEO of Big Sky Asset Management, weighed in: “Our portfolio has performed solidly this year, but activity is still fairly muted globally, especially in the core-plus sector, which makes up the majority of medical office and healthcare-related real estate.” He added that other asset types are currently more attractive to capital, making fundraising more challenging. “We’ve had to be a lot more flexible in how we raise money.”
In terms of investment strategy, Signor projected that Big Sky would end the year “net neutral,” with acquisitions roughly balancing dispositions. When asked by moderator Peter Becronis, Partner at ShareMD, about investor preferences between value-add and stabilized assets, Shepherd responded that Newmark is seeing interest in both, depending on investor return requirements.
Signor added perspective on today’s investment environment: “You’re looking for core-plus risk with value-add returns. The challenge is we’re competing with fixed income in many investor portfolios. Right now, private credit offers better total return, so we can’t achieve double-digit cash-on-cash returns combined with mid-teen total returns like you can in private credit.”
Shepherd concluded by acknowledging that while outsized returns may not be inherent to healthcare real estate, the sector offers key advantages. “It’s just not what it is by definition, but you certainly are seeing groups look for stability, resiliency, and strong credit, where you can still get positive accretion—particularly tied to your debt.” He added, “When you think about it from that dynamic, there are very few real estate sectors where you can check all those boxes like you can with medical. So overall, we are seeing investors lean in.”
This year, despite its challenges, appears poised to end on stronger footing as the sector adapts and investors pursue long-term stability in a complex economic landscape.
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