{"id":3178,"date":"2022-03-08T10:58:19","date_gmt":"2022-03-08T10:58:19","guid":{"rendered":"https:\/\/alliancecgc.com\/?p=3178"},"modified":"2022-05-03T19:18:42","modified_gmt":"2022-05-03T19:18:42","slug":"healthcare-real-estate-location-design","status":"publish","type":"page","link":"https:\/\/alliancecgc.com\/education\/healthcare-real-estate-location-design\/","title":{"rendered":"The Future of Healthcare Real Estate: Building Location and Design Trends to Watch"},"content":{"rendered":"\nEducation<\/a>\n\t

The healthcare real estate market continues to prove its resiliency, most recently, in the wake of the COVID-19 pandemic. There was a brief pause in transaction activity during the depths of the pandemic, but the sector continued to chug along, with rent collections and occupancy generally right on track.<\/p>\n

Medical office buildings<\/strong><\/a>, in particular, proved to be a bright spot for the industry.<\/strong> These properties became very high in demand and continue to be in demand today. Supported by an aging population, the need for medical office buildings is only expected to increase in the years to come.<\/p>\n

Those considering investing in healthcare real estate will want to monitor specific building locations and design trends closely. <\/strong>The industry is rapidly evolving before our eyes, and these trends will influence where, when, and with whom people will want to invest.<\/p>\n

Read on to learn more.<\/p>\n

Related: <\/strong>What are The Best Ways to Invest in Healthcare Real Estate?<\/strong><\/a><\/p>\n

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\n\t\tPredicting the Pandemic’s Influence in the Future\n\t<\/h2>\n\t

The COVID-19 pandemic certainly impacted how<\/em> healthcare services are delivered and where<\/em> those services are delivered.<\/strong><\/p>\n

The pandemic forced many healthcare providers to put their expansion plans on hold, at least momentarily. Others have started to rethink how and where services are delivered entirely. For example, the use of makeshift facilities or temporary clinics emerged as a viable, short-term option for hospitals facing bed shortages. Meanwhile, many providers had to reassess how to staff their clinics due to a profound labor shortage.<\/p>\n

According to one joint study by PwC and the Urban Land Institute, there will “likely be a massive shift” in traditionally designed spaces in healthcare facilities<\/strong> and other commercial property types due to the pandemic. For example, medical offices may develop more design flexibility. Standard patient rooms may be easily converted into ICUs in the future, especially in the wake of a significant public health emergency like a global pandemic.<\/p>\n

That notwithstanding, the tide seems to be turning on healthcare providers’ expansion plans. After a momentary pause, and now that revenues are back on the rise, many clinicians are looking to grow and expand their operations- and need real estate to do so.<\/p>\n

In short, medical office buildings have emerged as one of the critical darlings of the real estate market. These properties have proven to be exceptionally resilient in the wake of COVID.<\/strong> They provide essential services that cannot be put off indefinitely. Healthcare is not a discretionary need.<\/p>\n

It’s no surprise, then, that investment in medical office buildings is once again on the rise<\/a>. With so much pent-up demand, some have estimated that spending on healthcare construction projects will reach a staggering $45.8 billion in 2023.<\/p>\n

\n\t\tMedical Offices Won’t be Impacted by Telehealth\n\t<\/h2>\n\t

COVID ushered in the widespread use of telehealth, at least compared to prior utilization rates. Whereas fewer than 1% of healthcare visits were held virtually pre-pandemic, the rate skyrocketed by 40% during the height of the pandemic.<\/strong> However, this trend has since slowed and even started to decline by all indications. According to the Commonwealth Fund<\/a>, only 6% of healthcare visits were virtually conducted by September 2020.<\/strong><\/p>\n

Some specialties have barely been impacted by telehealth. Ophthalmology, orthopedics, surgery, dermatology, OB\/GYN, urology, oncology, cardiology, and pediatrics are the specialties least likely to utilize telemedicine. The most significant outlier is behavioral health, which proved to use telemedicine successfully during the pandemic. Upwards of 40% of behavioral health appointments continue to be held virtually.<\/strong><\/p>\n

Therefore, even if the rate of telehealth visits remains marginally higher than it was pre-pandemic, few industry leaders expect it to have a dramatic impact on medical office properties. Moving forward, any replacement in in-person visits will likely occur among lower-acuity services. Medical offices oriented toward higher-acuity specialties may feel little to no impact from any rise in telemedicine.<\/p>\n

These visits continue to be best held in person, where clinicians can meet face-to-face with their patients. This fact bodes well for <\/a>medical office real estate investors, especially given that higher-acuity medical offices have historically boasted the most robust rent growth<\/strong> in the medical office market.<\/p>\n

Related: <\/strong>Why Investors are Interested in Medical Office Buildings<\/strong><\/a><\/p>\n

\n\t\tMedical Office Building Location Trends to Watch\n\t<\/h2>\n

Medical office buildings are an often overlooked asset because many investors do not understand the nuances<\/a> of the healthcare industry. However, those who learn about the sector will find that these properties make exceptional additions to any investor’s portfolio.<\/a><\/p>\n

The key to successfully investing in medical office properties is to invest in well-located ones. <\/strong>Below, we look at some of the medical office building location trends that investors should be monitoring as we emerge from the COVID-19 crisis.<\/p>\n

\n\t\tBringing Healthcare Closer to Home\n\t<\/h3>\n\t

One trend that was already in the making pre-pandemic was the shift from providing healthcare on hospital campuses to moving that same care to off-campus medical office building (MOB) properties closer to where people live. This trend accelerated in the wake of COVID when people feared visiting urban areas and hospital settings where the risk of contracting the virus was arguably higher (especially if travel to these facilities required public transit).<\/p>\n

Now, especially with so many individuals working remotely from home (and therefore, not traveling into urban areas with such frequency), there is a growing expectation for healthcare to be available closer to people’s homes.<\/strong><\/p>\n

One of the ways we’re seeing healthcare providers respond is by setting up shop in pharmacies, shopping malls, and even big-box retail locations like Walmart. These properties, which tend to be inherently well-located, provide greater convenience and ease of access than traditional hospital settings.<\/p>\n

\n\t\tMove to Outpatient Facilities\n\t<\/h3>\n\t

Along those same lines, one of the hottest trends shaping healthcare real estate is the shift to providing medical care in outpatient facilities.<\/a><\/p>\n

One of the reasons for this shift pertains to cost containment. Healthcare costs have been rising at dramatic rates. There’s growing pressure on the healthcare industry to drive down costs in response.<\/strong><\/p>\n

Healthcare providers are looking at many solutions.<\/p>\n

One such solution has been to identify certain services that can be delivered off-campus. This could involve care made available at outpatient facilities, or in some cases, through third-party home health companies that provide care at patients’ homes.<\/p>\n

The benefit of outpatient facilities is that they are often less expensive to construct and operate than traditional hospitals. However, building new MOB properties is still another cost hospital systems incur (and arguably, the construction of said facilities does not contain costs). In some cases, hospitals will look to dispose of and monetize or otherwise consolidate their more costly urban campuses to help offset the costs of new outpatient facilities.<\/p>\n

Outpatient facilities are also growing in popularity among non-system healthcare providers. <\/strong>Building networks of small, branded facilities that offer specific services- ranging from visual to dental services, physical therapy to cosmetic care- is becoming ever more profound, a trend expected to continue for the foreseeable future.<\/p>\n

Whether you’re a new player to the investment world or a long-standing investment professional with the best portfolio in the business, selecting a quality healthcare real estate or medical office building investment can be a tricky decision. Consider reaching out to our team of experts at <\/em><\/strong>Alliance<\/em><\/strong><\/a> today to learn about everything we can do to help.<\/em><\/strong><\/p>\n

\n\t\tThe Future of Standalone Urgent Care Clinics\n\t<\/h3>\n\t

During the past decade, there has been a dramatic increase in standalone urgent care clinics (or “Doc in a Box” facilities). <\/strong>These immediate-care clinics offer various services, from stitches and x-rays to viral testing and more. Large amounts of these facilities are privately owned and occupied by regional chains. Their business model is simple:<\/p>\n