Why Healthcare Developers Are Shifting Focus to Smaller Markets
- Shane Lovelady
- Jun 19
- 1 min read
In 2025, we’re seeing a noticeable pivot in healthcare real estate: developers are increasingly targeting smaller, secondary, and even tertiary markets for new medical builds. Why? It comes down to three key drivers—cost, competition, and coverage.
1. Lower Cost Structures: Land, labor, and permitting are significantly more affordable outside of major metros. For medical office and ambulatory developers, this creates a compelling margin opportunity—especially for ground-up projects.
2. Provider Expansion: Healthcare systems are broadening their footprint to meet patients where they are. From urgent care to outpatient surgery centers, providers want scalable access points across growing suburban and rural populations.
3. Market Saturation Elsewhere: In top-tier cities, saturation has made it harder to secure anchor tenants or hit target cap rates. But in overlooked zip codes, there’s room to grow—and less red tape.
At Lovelady Perspective, we help investors, brokers, and developers identify these emerging markets through valuation and market intelligence that blends data with practical insight. Whether you’re planning a build, exploring a JV, or underwriting a new acquisition, our team offers analysis you can trust.
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