Commercial real estate and investment management company JLL has published a new report that unpacks a significant shift in the healthcare industry from traditional hospital-based services to outpatient care sites, emphasizing advancements in technology, changing patient preferences, and evolving reimbursement models as drivers of the changing landscape.
Surgeries and lab services, once confined to hospitals, are now also conducted in office buildings and retail centers. This transition is diversifying healthcare facilities, according to the report, and aims to make healthcare more accessible by bringing services closer to where people live and work.
The report, "U.S. Medical Outpatient Building Perspective," highlights factors driving demand for medical outpatient buildings (MOBs). Demographic changes, such as the aging population, are notable factors. The population aged 80 and over is projected to increase by 50% over the next decade, necessitating more outpatient services. Technological innovations are enabling less invasive treatments and early detection, further facilitating the shift from hospital stays to outpatient care.
Specialized medical fields like endocrinology are expanding rapidly, influenced by new treatments for diabetes and obesity. The growth in outpatient surgical procedures, such as joint replacements, is also boosting the need for related outpatient services, including rehabilitation, according to the report.
Real estate fundamentals are adapting to this shift. While traditional office spaces have seen a decline in occupancy, MOBs have experienced growth in both on-campus and off-campus locations. The construction of new outpatient facilities, particularly in fast-growing sunbelt markets like Austin and Orlando, is keeping pace with demographic and economic growth.
Construction costs, expected to rise by 2% to 4% in 2024, pose a challenge. Health systems are advised to optimize existing spaces to control expenses, according to Andrew Quirk of JLL's Project and Development Service.
The market for MOBs remains attractive to investors, with properties linked to robust health systems receiving multiple offers. The report suggests a stabilizing market with potential investment opportunities as interest rates peak and economic conditions moderate.
JLL underscores the importance of aligning medical real estate strategies with healthcare delivery trends, emphasizing efficiency and patient access to care across the U.S.
The full report
can be read here.
