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HEALTHCARE REAL ESTATE, CONSTRUCTION, DESIGN & FACILITY PLANNING

Top Trends Driving Demand for Healthcare Real Estate in South Florida

South Florida is on the verge of its for medical providers? were completed in 2016, while another
a major statewide demographic This looming demand for prop- 17.3 million square feet of outpatient
shift, with impacts that will ripple erty to build patient treatment projects with a value of almost $6.5 bil-
through the healthcare economy facilities likely will require cre- lion were started. Locally, in 2018,
in many ways. Currently home to ative solutions such as infill devel- Cleveland Clinic Florida opened its new,
the highest concentration of older opment, repurposing existing three-story, 73,000-square-foot Coral
residents in the nation, more than properties, and utilization of non- Springs Family Health Center. Built for
3.3 million Floridians are 65 and traditional properties for medical about $33 million and equipped for
older, with one in 20 is now 80+. care. For example, there are many another $20 million, the ambulatory sur-
With continuing migration into “big box” retail sites (think Sears, gical center houses 17 medical special-
Florida and increased longevity, K-Mart) that could easily be con- ties, imaging and diagnostic services.
nearly one in four Floridians will verted to medical uses. The park- As the aging population continues to
be 65 and older in 2030, according ing is there, and the structures are shape the future of healthcare real estate
to The Florida Legislature Office BY MICHAEL FEUERMAN AND JONATHAN THIEL sound, requiring only interior in South Florida, healthcare real estate
of Demographic Research. This renovation. developers will face challenges related to
growing population sector will Will investors continue to bring finding land and existing buildings at a
certainly increase the local demand for formidable challenges to medical funds to medical office REITs and other reasonable price. End users, including
medical care, but will there be enough providers. Construction costs are up and medical properties? There is lingering hospitals, physicians and diagnostic cen-
medical real estate to keep up? vacancy rates are down, making renovat- uncertainty about the long-term impacts ters, will have difficulty finding afford-
Real estate development and demo- ing and leasing existing space more diffi- of the Affordable Care Act (ACA) and able space to lease and contractors who
graphics go hand-in-hand. Our aging cult and cost-prohibitive. Regarding fac- the Tax Cuts & Jobs Act (TCJA), includ- can perform at an affordable level.
population will require more medical tors limiting construction of new med- ing how many people will be insured, Navigating this real estate landscape
care. Medical providers will need to pre- ical office buildings, the apartment boom how leases will be treated for accounting demands market knowledge specifically
pare in advance for the demographic has driven land prices so high that office purposes and other investment consider- as it pertains to healthcare providers.
shift. Physicians must prepare for expan- developers cannot compete to purchase ations associated with purchasing, leas- Expect to see emphasis on creative long-
sion. Diagnostic and treatment centers sites. Lenders have financed many new ing and owning. Another big question is term options for renewal and expansion
will need additional locations. Hospitals apartment projects but shied away from how new technologies, particularly as a hedge against diminishing supply
will need to expand outpatient services, speculative office development. Medical telemedicine, will reshape South and rising costs. Brokers, attorneys and
on-and-off campus offices, and possibly office requires more parking than many Florida's healthcare delivery system. appraisers who are experienced in the
acquire more medical practices. other uses, thus requiring more land for This may upend the traditional “bricks healthcare real estate sector will be
Considering these needs, the current development. Will these costs be passed and mortar” medical office to a degree focused on guiding all players through
commercial real estate market presents on to the patients or will they lower prof- none of us can predict. the markets and locating “deals.”
Despite various reasons for uncertain-
ty, the coming increase in demand for Michael Feuerman, Esq., CCIM, is a
medical services should keep investment Managing Director of Berger Commercial
in medical properties at a high level. In Realty, with offices in Miami-Dade,
Shared fact, in 2016, 2017, and 2018 to date we Broward and Palm Beach counties. He can
be reached at MFeuerman@bergercom-
have seen very healthy investment and
development in healthcare real estate. mercial.com or (561) 430-2303. Jonathan
Medical On a national scale, according to data Thiel serves as Senior Sales Associate at
Berger Commercial Realty.
released by Revista and Healthcare Real
Estate Insights (HREI), outpatient med- He can be reached at JThiel@berger-
Suites ical real estate development projects commercial.com or (954) 652-2020.
totaling nearly $7.7 billion in construc-
tion value and 19.4 million square feet

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18 December 2018 southfloridahospitalnews.com South Florida Hospital News