Based on a new Transwestern Healthcare Real Estate Report, swelling demand for U.S. healthcare services may push forecasted demand for medical office space well above supply in several U.S. markets. The report, Medical Office Space Gets Tight, bases its predictions on the anticipated growth in healthcare workers through 2019 and compares average space usage per worker to space that now exists or is currently under construction in 14 markets.
"The segment of the population at or over the age of 65 is growing at a rate 14 times faster than those aged 64 or younger," said Jay Johnson, Managing Director of Healthcare Advisory Services. "A greater demand for healthcare services means more workers, and this is going to make healthcare space much tighter in some markets."
Specifically, current projections estimate that just over 150,000 healthcare practitioners will be added to the economy over the next two years, and total demand for medical office space across the U.S. could range from 150.5 million to 225.8 million square feet by the end of 2019.
"There is approximately 110 million square feet of available medical office space in existing and under-construction buildings in the U.S. as of the second quarter of 2018," said Director of Research Elizabeth Norton, the report's author. "If all healthcare practitioners added to the economy through 2019 aim to locate within medical office space, absorption of this demand is impossible without a major shift in how people expect and receive healthcare."
New York, Dallas-Fort Worth, Atlanta, Denver and Miami-Fort Lauderdale would be the most challenging for practitioners wishing to locate within medical office space. But other real estate options could provide feasible solutions, including leasing nontraditional spaces in conventional office buildings or repurposing empty retail space for medical uses.
Norton noted that the emergence of new forms of healthcare, such as telemedicine, digital health, and shared service centers, could suppress future demand to some degree, depending on how quickly these new approaches are adopted by the healthcare industry.
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