HOUSTON – Discussions about repealing and replacing the Affordable Care Act under the Trump administration have not slowed activity in the healthcare real estate sector, according to Eric Johnson, national director of Transwestern’s Healthcare Advisory Group.
Johnson shared his observations at the Texas Healthcare Real Estate 2017 conference in Houston, during a panel that included Alan Whitson, president of the Corporate Realty Design & Management Institute, and Ralph Bivins, editor of Houston-based Realty News Report.
After the Affordable Care Act was enacted in 2010, many healthcare organizations delayed expansion and capital spending because of regulatory uncertainty. That cautious approach characterized much of the industry for several years.
Even amid ongoing debate in Washington over healthcare reform, Johnson said the industry now appears confident enough to proceed with expansion plans and real estate transactions. The current “repeal and replace” discussions have not halted decision-making, he added, noting that he oversees Transwestern’s healthcare activity nationwide.
In many ways the medical real estate market has shown resilience in recent years. Occupancy rates at investor-owned outpatient buildings have remained relatively steady since the end of the Great Recession. Data from Revista shows occupancy rising from 91.4 percent in the fourth quarter of 2009 to 92.5 percent by the third quarter of 2016, illustrating a stable demand for outpatient facilities.
In Houston, hospital systems have rapidly expanded into suburban areas to keep pace with population growth. The U.S. Census Bureau reports the greater Houston area added about 159,000 people in 2015, bringing the regional population to roughly 6.7 million. That population growth, along with an aging demographic, increases demand for healthcare services and supports continued facility development.
Johnson said hospitals are expanding into suburban markets such as The Woodlands, Katy and parts of Fort Bend County to ensure full geographic coverage and protect market share. To meet growing demand, the Houston area currently has more than 5 million square feet of medical-related construction—hospitals and medical office buildings—under way, according to Transwestern.
Feb. 27, 2017 Realty News Report Copyright 2017