PICOR Connect | Trends in Commercial Real Estate

Medical Office Space Demand - A Rising Tide

Posted on Fri, Jun 17, 2011

Start counting.  Each day for the next 18 years, 10,000 people are turning 65 years old. The message is loud and clear: We are aging fast. Not surprisingly, the implications of this demographic trend for the health care industry and medical providers are enormous. Following a periodic of uncertainty, some of which still lingers in the afterglow (or aftermath, depending on your perspective) of healthcare reform, factors impacting demand for medical office space are beginning to push the snowball downhill in Tucson and across the nation.

Accountable Care Organizations - a new model

The new model for patient care will become the Accountable Care OrganizationMedical office space demand (ACO) whose system will keep physicians ‘on the hook’ throughout the continuum of patient care.  Greater emphasis is being placed upon collaboration and the outcome of provider care, not simply that the physician ‘did something’ to benefit the patient. Among many challenges facing the healthcare system and opportunities for the ACO’s success:

  • Management of the chronically ill - At 10% of the population and 70% of healthcare costs, opportunity knocks 
  • The Pig in the python - The sheer number of Baby Boomers aging equals increased demand on the system
  • Increasing lifespan - Living longer means more older (and oftentimes chronically ill) health care consumers
  • Active lifestyle - Baby Boomers' penchant for physical activities further compounds pressure on the system

Tucson Medical Center recently announced it is collaborating in the creation of the nation's first 'Sustainable Health Community' based on the ACO model.

Changes in medical office space design

The enormous public debate regarding the United States health care system is leading to monumental adjustments on the ground. The traditional doctor's office will be redesigned in order to accommodate the new healthcare delivery model,  Design elements of medical office space in the Accountable Care model will include these features:

  • Visual contact between staff and physicians
  • Space for private patient interaction
  • Areas for teams of professionals to diagnose, treat and educate patient
  • Staff training and morning huddle locations
  • Computers in all works areas - offices, exam room and waiting area for staff, physician, nurse and patient use

More changes in the works

Medical office space examinationWe are already seeing shifts underway in the types of medical properties that our clients favor. With representation of TMC HealthCare, Southern Arizona’s largest not-for-profit community hospital and HCP's Tucson medical office building portfolio (the nation’s largest medical REIT), PICOR has the privilege of working with many medical practices throughout the greater Tucson office market.  In recent years, many physicians preferred to purchase their offices in stand alone settings.  Increasingly, medical groups prefer to lease rather than purchase. Locations with ease of access are important, with greater emphasis being placed upon proximity to hospital campuses.

If you are a practitioner, how do you see industry changes impacting your use of facilities? If you are in the CRE field, are you seeing tangible shifts that we haven't mentioned here? Architects and space planners, how are you changing medical office space planning in the face of these trends? We welcome your comments.

Rick Kleiner, MBA, with PICOR since 1995, is a PrincipalMedical office space broker specializing in the sale, leasing and investment of office and medical properties. With special emphasis on the real estate needs of the health care industry, Rick focuses on business solutions for medical practitioners and associated services. In 2010, Rick was among PICOR’s “Winner’s Circle,” the company’s top three annual producers, and led the Office Division as Top Producer.  Prior to joining PICOR, Rick served as Vice President of Marketing for Up With People.

Photo credits: Tucson Citizen, Dow JonesGary Rumack Photography

 

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Topics: Tucson, Market trends, Leasing, Office, Medical office