The Rising Demand for Healthcare Real Estate in Secondary Markets

For years, the focus of healthcare real estate has been on major metro areas—big cities with high population density, top-tier hospitals, and large medical office buildings. But things are shifting. Investors and healthcare providers are turning their attention to secondary markets, smaller cities and suburban areas that are experiencing rapid population growth, lower costs, and increasing demand for medical services.

There are a few reasons for this shift. One is affordability. In major metros, the cost of medical real estate—whether for purchase or lease—has skyrocketed. Healthcare providers, especially outpatient clinics and specialty practices, are finding better deals and more space in secondary markets. Lower overhead means they can invest more in equipment, staffing, and patient care rather than sinking money into rent.

Another factor is patient migration. More people are leaving big cities for smaller, more affordable communities, and they’re bringing their healthcare needs with them. Hospitals, urgent care centers, and medical offices are following suit, expanding into areas where demand is high, competition is lower, and operating costs are more manageable.

This shift also benefits investors. Medical real estate is a stable, recession-resistant asset, and secondary markets are offering higher yields compared to oversaturated urban centers. Cap rates tend to be more favorable, and with healthcare providers signing long-term leases, secondary market properties are becoming a smart, low-risk investment.

Of course, not every location is a winner. The key to success in secondary markets is understanding demographics, demand, and infrastructure. Investors and providers need to evaluate whether a given area has the patient base, referral networks, and workforce needed to support long-term growth.

As healthcare continues to decentralize, expect to see even more expansion into secondary markets. Whether it’s a medical office near a growing suburban community or a specialty practice in a regional hub, these locations are becoming the next big opportunity in healthcare real estate.

If you’re looking at investing in or appraising medical real estate in secondary markets, let’s connect. I’ll help ensure your valuation reflects the growing demand in these areas.