Davis is proud to share that Midwest ENT – Lakevilledevelopment was recently named a Top Project of 2025 by Finance & Commerce! The award was presented at the Top Projects Awards event at Quincy Hall in Minneapolis, celebrating the outstanding projects and teams shaping Minnesota’s built environment.
This 14,000 SF, single-tenant Class A outpatient medical building was delivered in just 10 months, a remarkable achievement for a project of this scope and complexity. From navigating site acquisition to coordinating design and construction around four distinct specialty programs, every phase of this project reflected the strength of Davis’ strategic planning and unwavering commitment to excellence. Officially opening its doors in April 2025, Midwest ENT – Lakeville delivers specialized ENT, Allergy, Facial Plastics, and Medical Spa care to patients across the growing south metro community. This recognition reflects the outstanding collaboration between Davis and various trusted industry partners including Synergy Architecture Studio, Timco Construction, and Midwest ENT. Congratulations to everyone who helped bring this project to life!
The optimism that shaped the healthcare real estate (HRE) sector at the start of 2026 has given way to a more cautious, selective market at the halfway point, according to a mid-year update from Davis, a national healthcare real estate firm. Persistent interest rate volatility, disappointing inflation data and geopolitical shocks — including the conflict in Iran and uncertainty surrounding the Strait of Hormuz — have stalled the anticipated rate cuts that many investors had built into their 2026 plans, even as underlying demand for healthcare space remains strong.
“Coming into the year, we expected enough clarity on rates to be aggressive in capital deployment,” said Stewart Davis, Executive Vice President, Davis. “That window hasn’t materialized the way we hoped. Rates continue to creep up day to day, which makes it very difficult to confidently underwrite a deal today when things could change with a closing 60 to 90 days out.
As a result, Davis predicts that their 2026 acquisition projections could be lower by as much as 25%.
Rate Unpredictability Reshapes Underwriting
Interest rate volatility has become the defining challenge of the year’s second half. Davis pointed to swings of several basis points within a matter of days as evidence of how unstable the debt markets have become, a dynamic that leaves little room for error on deals with extended closing timelines.
To illustrate the risk facing pipeline deals across the sector, Davis recalled a 2022 acquisition opportunity in Alaska. A construction delay pushed the closing date out and during that delay, rates rose nearly 200 basis points. The potential for a repeat of that type of scenario reinforces the need for discipline.
“A deal that looks profitable today can turn upside down if rates move against you before closing,” Davis said. “Even larger, well-capitalized groups that can buy all-cash and refinance later are likely to underwrite more conservatively.”
A Regional Divide: Sunbelt Premiums vs. Upper Midwest Value
Regional pricing has diverged sharply in 2026. In high-growth Sunbelt markets — including Arizona, the Carolinas, Nevada, Texas and Florida — well-capitalized buyers are paying cash and, in Davis’s view, often overpaying based on favorable demographic and tax trends.
At the same time, some larger REITs and private equity groups have pulled back from Minnesota and the broader Upper Midwest amid perceptions about the state’s political environment. The retreat has left Davis, based in Minneapolis, with a smaller pool of competitors and comparably better pricing in its home market.
“It’s created an interesting dynamic,” Davis said. “We’re seeing groups overpay in markets that look attractive on paper, while a market like Minnesota, which we know extremely well, is being overlooked for reasons that have nothing to do with the underlying real estate fundamentals.”
Construction Costs and Labor Shortages Curb New Development
The economics of development have grown more difficult since the start of the year because of costs, lead times and labor. Shell construction costs for Class “A” MOBs, which don’t include tenant improvements, now average approximately $250 per square foot from roughly $150 per square foot in 2019. Lead times for critical components such as electrical switch gear can now stretch up to 18 months. Moving forward, an aging, largely unreplaced skilled trade workforce, particularly in sub-specialties like brick masonry, is expected to make labor even more expensive and scarce in the years ahead.
Health systems continue to face their own reimbursement and cost pressures and are opting to renew leases or move into existing second-generation space rather than commit to ground-up development. The rental rate for lease renewals and second-generation spaces may be 30-40% lower than newly completed construction.
“The demand for ambulatory care hasn’t gone away,” Davis said. “But the math on new construction is harder to make work than it was a few years ago, and that’s pushing health systems toward existing space rather than new builds.”
Healthcare Real Estate’s Long-Term Case Remains Intact
Despite near-term headwinds, Davis remains confident in the sector’s long-term trajectory. The firm points to the recent sale of Kane Anderson Real Estate to a British private equity group as evidence that healthcare and healthcare-adjacent real estate has moved from a niche allocation to a core one for institutional investors, alongside sectors like industrial and logistics.
“Healthcare real estate is still a fundamentally need-based asset class,” Davis said. “This year has required more discipline and more patience than we expected in January, but the long-term demand drivers — an aging population, the shift to outpatient and community-based care, and constrained supply — are still very much in place. “We believe the back half of this year and into 2027 will bring clarity to the market.”
Portland, ME — February 2026 — Davis, a national healthcare real estate firm operating out of Minneapolis, MN, announced the successful expansion and long-term lease extension of InterMed at 84 Marginal Way, a prominent Class A outpatient medical property located in Portland’s Bayside neighborhood. The transaction secures 102,557 square feet across 10 stories, and includes structured parking, under a new 16-year lease term.
“The transaction underscores Davis’ philosophy of investing in high-quality, mission-critical assets and supporting essential healthcare infrastructure within the Portland market and around the country,” said Stewart Davis, Executive Vice President, Davis.
With InterMed’s expansion, the property becomes the premier healthcare building in downtown Portland and serves as InterMed’s flagship location in the state of Maine. As part of its long-term commitment, InterMed will consolidate several existing clinical specialties into the building, enhancing operational efficiency while delivering a centralized, state-of-the-art care environment for patients and providers.
InterMed’s long-term commitment underscores the strength of the location and the continued demand for outpatient clinical space in Greater Portland.
“It isn’t often that you see a physician group like InterMed leasing an entire vertical structure in a market the size of Portland,” said Davis. “Yet this is a unique situation, and it created a unique opportunity for our acquisition in 2021 and for InterMed’s lease expansion now.
According to Davis, downtown Portland, an economic driver for the state, sits on a peninsula with a scarcity of available land around it. That and its status as one of the few buildings with attached structured parking, makes it an extremely attractive signature property.
InterMed was represented by the team of Katie Breggia and Tom Moulton of The Dunham Group.
“Locking in a multi-year facility allows us to shift our focus to new acquisition opportunities and fundraising,” said Stewart Davis, Executive Vice President, Investments, Davis. “This provides us a clear opportunity for growth.”
At the end of 2024, Davis acquired WestHealth, a three-building, 201,000 square foot outpatient medical center in Plymouth, MN. The portfolio, located at 2805, 2855 and 3005 Campus Drive, comprises two outpatient medical buildings, an ambulatory surgical center (ASC) and an emergency/urgent care facility. The acquisition, at nearly $360 per square foot and an overall price of $72 Million, was one of the largest single asset sales in 2024 in the Minneapolis/St. Paul marketplace. At the time Davis acquired the asset, the portfolio of buildings was 96% occupied.
Davis, a national healthcare real estate firm operating in healthcare real estate development, property management, brokerage, investment, and consulting services, has completed $171 Million refinancing and line of credit up to $250 Million to strengthen current portfolio economics while also positioning the firm for sustained growth in the years ahead.
The arrangement with Capital One Healthcare, a division of Capital One Commercial Banking, covers 19 properties that total more than 820,000 square feet of space in eight states, including Minnesota, Iowa, Maine, Connecticut, Ohio, Tennessee, Louisiana and Texas.
“The renewed facility includes an advised line of credit up to $250 Million that will support future acquisitions, enhancing both capital flexibility and execution certainty,” said Mark Davis, Principal, Davis. “This transaction further strengthens the Davis platform and positions our Fund for sustained growth and robust investor returns in the years ahead.”
Additional characteristics of the 19-building portfolio covered by the refinancing include an average occupancy of 98% and a weighted average lease term (WALT) of 8.0 years. Nearly 30% of the space occupied in the portfolio is leased by credit-rated tenants. Across the portfolio, the properties have more than 80 tenants including prominent healthcare providers such as MHealth Fairview, Hartford Healthcare, University of Texas, University of Iowa, Ochsner, and Fresenius.
“Locking in a multi-year facility allows us to shift our focus to new acquisition opportunities and fundraising,” said Stewart Davis, Executive Vice President, Investments, Davis. “This provides us a clear opportunity for growth.”
At the end of 2024, Davis acquired WestHealth, a three-building, 201,000 square foot outpatient medical center in Plymouth, MN. The portfolio, located at 2805, 2855 and 3005 Campus Drive, comprises two outpatient medical buildings, an ambulatory surgical center (ASC) and an emergency/urgent care facility. The acquisition, at nearly $360 per square foot and an overall price of $72 Million, was one of the largest single asset sales in 2024 in the Minneapolis/St. Paul marketplace. At the time Davis acquired the asset, the portfolio of buildings was 96% occupied.
We are proud to announce that Anne Madyun has been named to the 15th class of the Midwest Commercial Real Estate Hall of Fame (2024) by Midwest Real Estate News Magazine! This prestigious honor recognizes Anne’s exceptional contributions to the healthcare real estate sector and places her among an elite group of industry professionals who excel even in challenging market conditions.
Since joining Davis in 2012, Anne has grown to establish herself as a powerhouse in healthcare real estate. Her impressive achievements include completing over 50 lease transactions valued at nearly $100 million in the past two years alone and leasing five medical buildings to 100% occupancy in a challenging 2024. Anne has consistently demonstrated the qualities that define true Hall of Famers: deep market knowledge, relationship building, and unwavering client service.
Anne’s commitment extends beyond her professional accomplishments to significant community engagement. She served on the MNCREW (Minnesota Commercial Real Estate Women) Board for four years, where she championed diversity, equity, and inclusion initiatives through including the creation of the Culture and Inclusion Committee. Her dedication to creating a more equitable industry where diverse professionals can thrive reflects the volunteer spirit that characterizes Hall of Fame inductees.
In 2023, Anne achieved her CCIM designation and was recognized as a CoStar Power Broker. She maintains active memberships in multiple professional organizations including MNCREW, WiredUp, HLAMN, and MNCAR, and was recently accepted into CREW’s National Healthcare Council.
Please join us in congratulating Anne on this well-deserved recognition of her expertise, innovation, and commitment to both her clients and the broader commercial real estate community.
MINNEAPOLIS (October 16, 2024)—Davis, a leading healthcare real estate development, investment and management firm, has made a significant investment acquiring WestHealth, a three-building, 201,000-square-foot outpatient medical center in Plymouth, MN. The portfolio, located at 2805, 2855 and 3005 Campus Drive, comprises two outpatient medical buildings, an ambulatory surgical center (ASC) and an emergency/urgent care facility.
The acquisition, at nearly $360 per square foot and an overall price of $72 million, is one of the largest single asset sales in the last 12 months in the Minneapolis/St. Paul marketplace.
At the time Davis acquired the asset, the portfolio of buildings was 96% occupied. The three connected buildings comprising the outpatient medical complex include:
2805 Campus Drive, a four-story, approximately 77,340-square-foot medical building with 19,300-square-foot floor plates.
2855 Campus Drive, a 6-story outpatient medical building totaling 103,500 square feet and featuring 17,240-square-foot floorplates.
3005 Campus Drive, a single-story, 20,000-square-foot emergency department building. The emergency/urgent care facility was developed in 2013.
“WestHealth is a trophy medical building asset in the Minneapolis/St. Paul market. It stands alone as the premier outpatient system hub for its consolidation of providers and diverse selection of services,” said Mark Davis, CEO, Davis. “As a longtime partner of Allina Health, Davis is excited to continue helping them provide expert care to our great community.”
The anchor tenant of the medical complex is Allina Health (AA- S&P, A1 Moody’s, AA- Fitch). It occupies approximately 73% or 146,000 square feet of space within the complex, including the ASC. Allina owns or operates 12 hospitals and more than 90 clinics throughout Minnesota and Western Wisconsin. WestHealth has been one of Allina Health’s most important ambulatory assets in its clinical portfolio for the past 25 years. Strategically located in the western suburbs, it sits on the main ring highway of I-494, providing convenient access across the entire west metro.
The relationship between Davis and Allina Health dates back more than two decades. As services provided by Davis have expanded over that time to include development, investment, property management and ownership, Allina Health has been both a client and anchor tenant of numerous projects. It was only natural when this asset became available for acquisition that Davis, a tenant-friendly owner well-known by Allina Health, would pursue the property.
“We look forward to our continued partnership with Davis, a company that understands the unique needs of healthcare. This facility allows Allina Health patients in the west metro access to expert care, close to where they live,” says David Joos, Allina Health’s vice president of operations in the Southwest region.
In addition to the ASC, the key medical specialty practices located within the three-building complex include Orthopedics, Oncology, Emergency/Urgent Care, ENT, Pulmonology, Cardiology, and Neurology, among others.
“The acquisition of WestHealth is the ideal addition to our Class “A” medical building portfolio which prioritizes credit tenancy and high investment specialty services,” Davis added. “The strategically located campus makes it an ambulatory care mainstay for many years to come.”
Financing was arranged by Eric Gundersen of Alerus Financial as well as long-time Davis partner Healthpeak. The transaction was a complicated one to complete and has been in progress for nearly a year. The presence of Allina Health as an anchor tenant, and the attention to detail exhibited by Allina Health representative Brian Bruggeman, CCIM, SIOR, Colliers, mitigated many potential challenges.
MINNEAPOLIS (January 16, 2024)—Davis Healthcare Real Estate completed the year-end acquisition of Zachary OMF I, a 24,465-square-foot outpatient medical facility in Zachary, LA, approximately 20 minutes north of Baton Rouge. It represents the firm’s first acquisition in Louisiana. Davis Medical Investors, LLC (DMI, LLC), acquired the property for approximately $8.6 million or $350/SF.
“This is a great opportunity for Davis to acquire a high-quality and well-established outpatient medical facility in an underserved market in Louisiana,” said Stewart Davis, Executive Vice President of Investments, Davis Healthcare Real Estate. “Given the landscape in the area, we believe this will allow us to establish a presence in the marketplace and build scale over time.”
The single-story Zachary OMF I is located at 4845 Main Street in Zachary. The building was developed in 2011 as a local hub for outpatient surgical procedures. At the time of the acquisition, the building was 100% leased to three synergistic tenants: Zachary Surgical Center, Ochsner Health, and Moreau Physical Therapy.
Ochsner Health is recognized as the leading healthcare system in Louisiana, with more than 40 facilities across the state. It uses the space at Zachary OMF for primary care services, women’s health, and ENT. The Surgical Center of Zachary is a well-recognized outpatient surgical center in the area. It completes orthopedic, gastroenterology, podiatry surgical and pain management procedures in the space. Moreau Physical Therapy provides a variety of physical therapy services across Louisiana.
Because of changing market conditions, Davis said the firm is looking optimistically at 2024. “We’re all familiar with the capital market instability that has characterized the HRE landscape over the last 12–18 months and made it challenging to underwrite acquisitions,” Davis said. “But we’re optimistic that there will be more certainty moving forward which will hopefully allow the market to settle into a new equilibrium where we can start getting deals done again.”
MINNEAPOLIS (January 16, 2024)–Davis Healthcare Real Estate has completed the acquisition of the two-story, UT (University of Texas) Health & Wellness Center in San Antonio, TX which allows the real estate investment firm to expand its holdings in a dynamic, growth-oriented market. The building was acquired by Davis Medical Investors, LLC (DMI, LLC), in an off-market transaction for $24,310,000 or $332/SF.
“We’ve been looking to expand into Texas, and in the San Antonio market specifically, for a few years now,” said Stewart Davis, Executive Vice President of Investments, Davis Healthcare Real Estate. “The building, located across the street from the fast-growing medical corridor in Northwest San Antonio, represents a great addition to our fund because of the credit worthiness and market presence of the tenant, the length of the lease term and the ability to immediately achieve scale in this market.”
The 73,390-square-foot UT Health & Wellness Center is located at 5788 Eckhert Road. The building, formally leased to the VA, was originally developed in 1998 and went through a comprehensive renovation program by the previous owner in 2022. It is fully leased to the University of Texas Health System who view this as a strategic location for the future.
The UT Health & Wellness Center is located in the heart of the 900-acre South Texas Medical Corridor area that continues to attract widespread attention and spawn significant new development in the area. The South Texas Medical Center is home to 9 major medical institutions—including the University of Texas—and hundreds of offices that employ more than 30,000 healthcare and related service professionals. Among some of the specialty areas it is known for include cardiovascular, rehabilitation, neurosciences, neonatal and emergency services, among others.
Because of acquisitions like UT Health & Wellness Center and changing market conditions, Davis said the firm is looking optimistically at 2024.
“We’re excited for 2024. It could be a good year to get more aggressive,” Davis said. “While the bid-ask gap hasn’t changed much yet, the likelihood of interest rate declines later this year and dry powder on the sidelines could change that and make it easier for deals to get done.”
