In recent years, the healthcare real estate development industry has experienced significant changes and challenges, with the COVID-19 pandemic magnifying these effects. As experts in the field gather at the Connect Healthcare Real Estate event, CEO of Meridian, Mike Conn, will share his insights in a panel discussion titled “Healthcare Real Estate Development, Design & Construction: Not Your Father’s Healthcare Project.” Here are some key points he shared leading up to the event:
Construction costs have had an impact on healthcare real estate, just like other sectors. Medical projects have been facing annual escalation and a shortage of construction labor. Although supply chain disruptions have calmed down, there are still disruptions in electrical equipment and air handling units. However, the days of unforeseen escalations of 15-20% seem to be behind us.
There has been a trend in recent years towards healthcare facilities that prioritize convenience for consumers, rather than being closely allied to hospitals. Major healthcare systems are focusing on placing facilities in communities for consumer convenience. Lower acuity services can be efficiently and cost-effectively provided in medical office buildings instead of expensive bed towers. Due to the hybrid remote work economy, there are many vacant or under-utilized buildings that can be converted into medical office spaces, offering affordability and speed to the market.
Adaptive reuse, such as converting standard offices into medical office space, is becoming more common. Empty general office buildings or retail buildings that are well-located can be repurposed for medical use. Although the cost of conversion can be comparable to ground-up development, the speed to market is often a valuable advantage. It is crucial to conduct appropriate due diligence and destructive testing to assess utilities, land-use requirements, and functional deficiencies.
The pandemic has not significantly impacted the design of medical office buildings. However, hospitals had to reconsider their design to handle a pandemic where there is airborne transmission. HVAC systems and building controls need to offer more flexibility in terms of positive air pressure, air changes per hour, and zoning. Flex space that can be used for multiple services becomes more important in the overall hospital design.
The Connect Orange County event will take place concurrently with Connect Healthcare Real Estate, providing valuable insights into the healthcare real estate industry.
Sources:
– Connect Healthcare Real Estate (event)
– Information provided by Mike Conn, CEO of Meridian
