Zoning Is Quietly Killing Medical Real Estate Deals

The biggest threat to your next medical real estate project might not be interest rates. It might be zoning.

Across the country, developers and operators are hitting walls when it comes to entitlements—especially in behavioral health and senior living. Cities love healthcare projects in theory. But when it comes time to approve the site plan or issue a conditional use permit, things slow down fast.

In many cases, the delay isn’t about the use. It’s about perception. Behavioral health facilities get lumped into the same mental model as “group homes” or “drug rehabs” by planning boards and local residents. Senior living often gets caught between multifamily and healthcare zoning buckets—creating gray areas that can take months to navigate.

That’s not something you fix with a better lease comp or cap rate. It takes local relationships, strategic positioning, and a zoning narrative that’s aligned with community priorities—public health, aging in place, job creation.

If you’re building in this market, you need to plan for zoning friction. It’s not just a box to check. It’s a deal breaker if you don’t get ahead of it.

Working on a deal and running into zoning issues? Let’s talk through it.

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