Why Medical Real Estate?
Vital Capital Partners (VCP) is a vertically integrated real estate investment platform that acquires, invests in and actively manages institutional-quality healthcare-centric properties throughout the United States. We believe that the demand for healthcare real estate facilities will steadily increase over the next decade as a result of a variety of demographic, economic and regulatory trends.
Our net lease strategy takes a different approach from traditional real estate, one focused on creditworthiness and mission critical operational importance of the underlying tenant. These assets are purpose-built for today’s healthcare real estate market environment.
We believe that long-term, net-leased medical real estate is structurally misaligned in the current interest rate environment. While rates have repriced traditional NNN retail and office assets, high-quality medical properties leased to essential healthcare providers are being discounted as if they share the same demand risk, despite fundamentally different utilization, reimbursement, and longer tenancy and commitment.
This mispricing is driven by a combination of rate-shock illiquidity, generalized “office” stigma, and institutional capital retreating from smaller, non-portfolio medical assets. As a result, investors can acquire long-duration, inflation-protected cash flows at cap rates that overcompensate for actual risk.
VCP focuses on single-tenant and multi-tenant medical properties with long remaining lease terms, NNN lease structures, and tenants embedded in local and regional healthcare delivery systems. Returns are generated primarily through durable current yield and long-term capital preservation, with upside from contractual rent escalations and cap rate normalization as rates stabilize and capital re-enters the sector.
Market Drivers
An Aging Population
Not only did the number of Americans aged 65 and over grow by nearly 15 million over the past decade, but it is also expected to increase by 47% by 2050, and the age group’s share of the total population is projected to rise an additional 6% to total 23%, according to the U.S. Census Bureau’s 2023 National Population Projections Tables.
65+ Population in U.S. (Millions)
Chart Source: U.S. Census Bureau, Oxford Economics. As of October 2023.
Family Motorhomes
Spacious rvs designed for families with multiple sleeping and living areas.
accommodates everyone:
Comfortably sleeps and houses the whole family.
fully equipped:
Includes kitchen, bathroom, and living spaces for convenience.
“An aging population means higher use of healthcare services and a greater need for family and professional caregivers.”
– The Office of Disease Prevention and Health Promotion; U.S. Department of Health and Human Services
As we age, we typically need more medical treatments. In fact, Americans 65+ drove 36% of healthcare spending in 2021, while composing only 18% of the total population, according to an analysis of the 2021 Medical Expenditure Panel Survey data from the Agency for Healthcare Research and Quality.2
Average Number of Healthcare Events Per Person
Chart Source: Agency for Healthcare Research and Quality Medical Expenditure Panel Survey. Data as of 2019.
Family Motorhomes
Spacious rvs designed for families with multiple sleeping and living areas.
accommodates everyone:
Comfortably sleeps and houses the whole family.
fully equipped:
Includes kitchen, bathroom, and living spaces for convenience.
Increase In Spending
Healthcare spending increased by 4.1% in 2022 to $4.4 trillion, totaling more than 17% of U.S. GDP, with projections reaching 19.7% by 2032.
Barriers To Entry
Healthcare real estate has inherent barriers to entry due to state and municipal regulations limiting overbuilding.
Job Creation
Healthcare hiring grew 3.9% in 2023, more than double other industries, accounting for 24% of all new U.S. jobs.
Historic Resiliency
During COVID-19, medical office buildings maintain rent collections above 90%, with vacancy rates holding at pre-pandemic levels.
Historically Healthy Returns
Since 2026, medical office has delivered the highest average income returns compared with major property types.
The Rise of Ambulatory Surgery Centers
Outpatient care expansion is driving ASC growth, with over 80% of surgeries now performed in outpatient settings, generating billions in healthcare savings.
Demand Influences
Healthcare is one of the largest line items for federal and state government spending. Healthcare spending grew 5.1% to $4.67 trillion in 2023. The largest shares of total health spending were sponsored by the federal government (34%) and households (27%). The private business share of health spending accounted for 17% of total health care spending, state and local governments accounted for 15%, and other private revenues accounted for 7%. Total healthcare costs, including all private and public spending, are anticipated to rise from $4.67 trillion in 2023 to $7.17 trillion by 2031, growing by an average of 5.5% per year, according to the Centers for Medicare and Medicaid Services. Healthcare spending is projected to grow faster than the economy, increasing from 17.6% of gross domestic product (GDP) in 2023 to 19.6% of GDP in 2031.
An important factor contributing to the increasing demand for healthcare properties is increased life expectancy over the past several decades. Life expectancy rates have generally shown consistent improvement for many decades. In 1972, the U.S. average life expectancy of a 65-year-old was 15.2 years. By 2021, this metric increased to approximately 19.1 years. Additionally, according to information compiled by the U.S. Social Security Administration, as of May 2022 it is estimated that about one out of every three 65-year-olds will live to be 90 years old, with one of every seven expected to live past 95 years of age. According to the CDC, life expectancy at birth for the United States population reached 79.11 years in 2023, a 0.08% increase from 2022. The estimated 2022 age-adjusted death rate decreased by 5.3%, from 879.7 per 100,000 persons in 2021 to 832.8. COVID-19 was reported as the underlying cause or a contributing cause in an estimated 244,986 (7.5%) of those deaths (61.3 deaths per 100,000).
Driving this increased life expectancy, and consequentially average population age, is the advancement in public health strategy and medical treatment. Life expectancy in the United States has increased by approximately 30 years over the past century, primarily due to the reduction of acute illness threats. However, an unforeseen consequence of longer life expectancy has been the increased prevalence of heart disease, cancer and other chronic diseases as the leading causes of death. The Appraisal notes an expectation that, as Americans age during the next several decades, the elderly population will require a larger number of formally trained, professional caregivers as a direct effect of these chronic diseases.
Sources
1. U.S. Census Bureau (2023)
2. JLL (2024)
3. PRB (2022)
4. CMS (2022)
5. CMS (2023)
6. Altarum (2023)
7. HealthLeaders (2023)
8. Revista LLC
9. CBRE (2023)
10. Sg2 (2023)
11. ASC Data (2024)
Family Motorhomes
Spacious rvs designed for families with multiple sleeping and living areas.
accommodates everyone:
Comfortably sleeps and houses the whole family.
fully equipped:
Includes kitchen, bathroom, and living spaces for convenience.
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Statistical data is as of January 2026. Figures are subject to change.
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