Ian Ritter is Online Content Manager at GRS Group
There are plenty of macro statistics out there that back up a need for future medical-office and seniors housing development. Simple numbers displaying how the U.S. population is aging pretty well back up the argument for a strong future demand.
Al Rabil, CEO of Kayne Anderson Real Estate Advisors, makes a compelling case for more building in an interview with GlobeSt.com. Among the many numbers he reveals in the interview are that 11,000 people Americans will turn 65 every day between now and 2020, and the number of doctor visits for 65 year olds will increase from four to seven per year.
There was about 7.5 million square feet of medical office space under construction as of early this year, according to a Marcus & Millichap medical office report detailing the first half of 2014. Buildings of 100,000 square feet made up about one third of the six million square feet completed last year, and construction in the Midwest and Southeast made up nearly half of that.
Developers are also increasingly building facilities that aren’t on medical campuses, either from the ground up, or as redevelopments of vacant retail spaces. The medical-office vacancy rate also slipped below 10 percent nationally in 2013 for the first time in five years, the report says.
In regards the Affordable Care Act, Julie Wilson, a senior vice president at Healthcare Realty Trust, says that the act will continue to increase medical-office demand as more patients, and capital, enter the sector. In an interview with The Tennessean, she sees “slow, steady, sustained growth in the sector.”
Though the vast numbers of aging Americans make a strong case for a future senior-housing-stock need, one must note that those tenants will come from a variety of economic situations. Right now there are 3.5 million seniors who live below the poverty level, with many more to come, so affordable seniors housing is sure to be in future demand.
Regardless, Health Care REIT, is making a $2.3-billion bet on a need for future seniors housing. That’s the total cost of its acquisition of 17 Mainstreet Property Group groups under development it is buying, as well as future pipeline projects.