According to the Bureau of Labor Statistics, the U.S. healthcare industry is the country’s largest employer. With more than 20 million Americans actively working in the sector, it represents 13.4% of all employment nationally. Bolstered by the Affordable Care Act and the aging U.S. population, the number of people employed in healthcare is expected to continue to grow 18% through 2026.
Despite the growing national demand for healthcare services, some metros are outpacing others. Those attracting young professionals and retirees top the list, including cities like Austin, Orlando, and Raleigh, to name a few. To date, however, new healthcare construction has been outpaced by the sheer numbers of those seeking care. This phenomenon does hold promise for future growth in the healthcare real estate sector.
A Shift Toward Decentralized Healthcare
Other factors central to healthcare real estate are the industry’s shift to a decentralized model. Facilitated by new technologies and consumers’ desire for nearby community-based alternatives, outpatient facilities, medical malls, and urgent care centers have all risen to prominence. In a word, hospitals are becoming a thing of the past. According to the Medicare Payment Advisory Commission, occupancy rates for hospitals have fallen 16% over the last few decades. The number of ambulatory surgery centers now rivals the number of hospitals.
Continued Promise for Medical Office Space
Medical office space continues to show promise for at least the next few years. Practitioners of all kinds, from independent physicians to healthcare systems, continue to seek out space to meet community demands. Rent in the sector continues to rise, growing by 21% since 2012. Occupancy routinely hovers above 92%. These markers reflect the stability of the medical office sector and the opportunity for investors.
This article originally appeared in Healthcare Realty Group’s September 2019 newsletter. Its employment figures, forecasts, hospital-occupancy discussion, rent and medical-office occupancy statistics, market examples, and property listings reflect the original publication date and may no longer be current.
