Healthcare Real Estate – a Boom, a Slow Down, and More….

Owen Covington’s article “Triad may never see another health care building frenzy like it hasrecently” in The Business Journal focuses on healthcare real estate development in the Triad area, but it’s takeaways apply well beyond that specific geographic region.

Owen focuses on the healthcare real estate boom in the Triad, but thankfully he does not stop there.  He looks to certificate of need applications filed with North Carolina as a possible indicator of healthcare real estate development in the near future.  The total project costs reflected by the CON applications for the first five months of 2013 are significantly lower than in the recent past, suggesting a large slowdown in such development.  Of course, not all healthcare real estate developments require a CON.  Just the same, we need to pay attention to such indicators.

One person quoted in this article expressed the belief that healthcare systems do not have the high levels of capital that they have had in the past.  As we’ve discussed here before, with healthcare reform and other pressures, healthcare providers will be focusing on reducing costs.  Obviously, such factors can slow healthcare real estate development.

But, all is not lost for those of us in healthcare real estate.  In this article, Jim Rogers anticipates more off-campus medical clusters.  We’ve certainly seen a lot of that in our practice, and such projects are quite often full real estate developments, not just small expansions, upfits and the like.

In healthcare real estate, it seems that the one constant is change.  How are you preparing for the next development?