Julie Sorensen, Director  GRS | Corteq  (312) 476-7658  jsorensen@grs-global.com

Julie Sorensen, Director
GRS | Corteq
(312) 476-7658
jsorensen@grs-global.com

There is plenty of growth in the medical-office sector, but it’s not because developers are building large assets. Hospitals are now looking to reach patients beyond their main locations in efforts to provide more convenience to a population that is both aging and more insured.

This means having smaller stand-alone buildings that have become more attractive to various types of investors, such as the net lease community.

There was a recent article in Bisnow highlighting “micro-hospitals.” Bisnow interviewed Vic Schmerbeck, executive vice president of strategy and development with Emerus, an operator of these facilities. He says it’s indicative of convenience retail.

“It’s not only closer, but more convenient, it’s when and where I want it, on terms I think [are] reasonable, both in time and cost,” he told Bisnow. “We’re creating tentacles for their system, to bring care closer to their patients, and to provide great coordinated care if they need to be in larger facility.” 

These micro-hospitals differ from the stand-alone emergency clinics and doc-in-a-box locations that have reached up in recent years, in that they are operated by not-for-profit hospital systems. They also offer inpatient services. So far, micro-hospitals are found in underserved urban and suburban areas, reported an article in HEALTHCARE Dive.

The micro-hospital sector is a strong aspect of the medical-office space, but this CRE specialty as a whole is doing well, according to a Marcus & Millichap (M&M) report released last year.  

In its semi-annual report on medical office, the firm said that vacancy rates are the lowest in nine years, at 8.6 percent. The Pacific Northwest fared the best of any region in the country, with a vacancy rate of 4.9 percent. At the same time, rents for medical-office assets as a whole are slowing increasing.

In line with the micro-hospital trend, M&M reports that most of the new facilities planned or under construction are off the main campuses of hospitals. This has been of help to retail real estate landlords. Many of these facilities are going into shopping centers and taking up vacancies left by big-box stores and empty malls, adding much needed traffic to those facilities.

The brokerage firm says that much of what’s driving this is the Affordable Care Act (ACA), which has upped the amount of insured citizens in the United States. While the fate of the ACA is uncertain under the Trump administration, most political analysts are believe that it is unlikely that a replacement program would strip the newly insured of their coverage.  

Additionally, an aging population of Baby Boomers who will need more care is certain, as is Americans’ desire for convenience and expediency especially when it comes to their health.