Healthcare construction costs surge 40% since 2020, landlords and tenants feel the squeeze
Healthcare construction costs surge 40% since 2020, landlords and tenants feel the squeeze link
- Non-residential construction costs are up as much as 40% since Feb 2020, with healthcare projects hit hardest, 35–50% of their budgets go to MEP systems, double that of typical commercial builds.
- Rising costs push landlords to reduce tenant improvement allowances, shift expenses back to tenants, and set higher rental rates tied directly to escalating development budgets.
- Providers face delays in facility expansion, limited patient capacity, and rising care costs as high rates, supply chain issues, and labor shortages ripple through the system.
My take: Healthcare used to be one of the “safe bets” in CRE, but spiraling build costs mean even hospitals and clinics now face the same margin pressure as office and retail. Deep pockets will keep building, everyone else will get squeezed out.
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Posted Oct 3, 2025, 5:17 PM UTC
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