The Reform of
By Bill Wiebe, SIOR, CCIM, CRE
“No matter what the outcome of the 2008 presidential election with regard to a national health care system, the real
estate dimension of health care is a growing, dynamic, and
visible area that deals with issues ranging from the cost to
the location to the architecture and design of facilities rang-ing;from;acute;care;hospitals;to;specialty;medical;office
That was the beginning of my article in 2008 for “Changes
Coming in Medical Office Space.” We now are embarking
on an increase in total health care dollar consumption of
$25 billion to $60 billion over the next five years. Some 120
million square feet of new space is expected in the United
States alone. Globally, healthcare has become a trillion-dollar endeavor.
Here are my predictions for the next five years and how
they may affect you:
Physicians and physician practices will either be employees or will form alliances with the large hospital systems,
generating a need for disposal of properties and a choice
towards new construction.
Construction of the new facilities will require the aid of
third-party real estate professionals, who will ( 1) aid in the
decision-making process and in choosing locations, based
on market knowledge and strategic market assessment and/
or ( 2) play a central role in the bidding process for new construction, with trained project managers assisting the hospitals in the RFQ process.
Hospital systems will require the help of third-party real
estate management to assist them in the ongoing management of properties and leases.
Suburban-based hospitals will be the norm; average size
will drop from 600,000 square feet to 300,000 square feet,
with a concentration of “24-hour hospitals.”
Long-term care facilities will be the substitute for patients
who need extended care.
Construction of hospitals and healthcare facilities will
have to adapt to the new technology. This means that some
processes based on nanotechnology will reduce the square
footage needed, while some of the new surgery areas will
increase based on the robotic technology that requires additional space for the larger surgical robotics. Patient rooms
that will increase the square footage but reduce the incidence
of airborne diseases will all have an effect on real estate
decisions. In either case you as a real estate professional will
be needed to help them navigate their way to accommodate
this technological change.
Therefore the boom will be driven by:
• Hospital systems
• Physician practices
• Medical office buildings
• Medical schools and community-based colleges
• Allied health care manufacturers that produces
the hospital equipment that is changing every five
• Special-care facilities such as diabetes and access
• Suburban--based surgical centers
• Diagnostic centers