Uncertainty and high risk are kryptonite to any investment community, and the healthcare real estate sector has seen a heavy dose of both since the beginning of the Great Recession.
From the economic crash of 2008-09, to the enactment of Obamacare in 2010, to the feds’ latest experiment—Ryancare, Republicare, Trumpcare, whatever you want to call it—no other major business sector has dealt with the level of chaos that healthcare owners, developers, providers, and consumers have faced.
Even as Speaker Paul Ryan’s Obamacare replacement died on the vine in Congress, President Trump and the GOP have no plans to walk away from their promise to repeal and replace the Affordable Care Act.
So, with a long road of political and financial uncertainty ahead for the healthcare sector, what does this mean for the nonresidential construction industry’s third-largest sector ($41 billion in annual construction spending)?
In the days and weeks following Trump’s historic victory, the consensus among healthcare sector analysts and AEC professionals was that the repeal and replace efforts would cause healthcare owners and developers to pump the brakes on major real estate construction and renovation plans in the pipeline. This, of course, was the case during the early days of the ACA, when many healthcare organizations halted construction projects until they could fully understand the implications of the law, especially the reimbursement structure.
More recent projections paint a slightly more positive picture for the healthcare construction market, at least in the near-term. In its latest healthcare real estate investment update, released last month (http://tinyurl.com/CBREhc17), CBRE Healthcare reported that healthcare providers “appear to be moving along with their strategy”—including their real estate plans—despite the turmoil in Washington, D.C.
“The ACA was a wake-up call for healthcare providers,” the report states. “In the last several years, healthcare providers have focused on ways to deliver care more efficiently and capture a greater market share to further their economies of scale. For developers, this means more outpatient facilities and a push to expand into new markets.”
Other real estate experts are not as upbeat. John Burns Real Estate Consulting, a respected housing market analyst based in Irvine, Calif., released a 68-page white paper last month (http://tinyurl.com/JBRChc17) that identifies healthcare as one of three major industries (the others being technology and automotive) that are “overheated and will likely be shedding jobs sometime soon.”
The most alarming indicator cited by JBRC: the sector’s rapid accumulation of debt—308% since 2009. This rate of growth far outpaces industry job and GDP growth, a circumstance that, historically, has triggered industry downturns.
Related Stories
| May 1, 2013
Groups urge Congress: Keep energy conservation requirements for government buildings
More than 350 companies urge rejection of special interest efforts to gut key parts of Energy Independence and Security Act
| May 1, 2013
World’s tallest children’s hospital pushes BIM to the extreme
The Building Team for the 23-story Lurie Children’s Hospital in Chicago implements an integrated BIM/VDC workflow to execute a complex vertical program.
| Apr 30, 2013
Tips for designing with fire rated glass - AIA/CES course
Kate Steel of Steel Consulting Services offers tips and advice for choosing the correct code-compliant glazing product for every fire-rated application. This BD+C University class is worth 1.0 AIA LU/HSW.
| Apr 30, 2013
Healthcare lighting innovation: Overhead fixture uses UV to kill airborne pathogens
Designed specifically for hospitals, nursing homes, child care centers, and other healthcare facilities where infection control is a concern, the Arcalux Health Risk Management System (HRMS) is an energy-efficient lighting fixture that doubles as a germ-killing machine.
| Apr 24, 2013
North Carolina bill would ban green rating systems that put state lumber industry at disadvantage
North Carolina lawmakers have introduced state legislation that would restrict the use of national green building rating programs, including LEED, on public projects.
| Apr 24, 2013
Los Angeles may add cool roofs to its building code
Los Angeles Mayor Antonio Villaraigosa wants cool roofs added to the city’s building code. He is also asking the Department of Water and Power (LADWP) to create incentives that make it financially attractive for homeowners to install cool roofs.
| Apr 10, 2013
ASHRAE publishes second edition to HVAC manual for healthcare facilities
The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) has published a second edition of its “HVAC Design Manual for Hospitals and Clinics.”
| Apr 2, 2013
6 lobby design tips
If you do hotels, schools, student unions, office buildings, performing arts centers, transportation facilities, or any structure with a lobby, here are six principles from healthcare lobby design that make for happier users—and more satisfied owners.
| Apr 2, 2013
4 hospital lobbies provide a healthy perspective
A carefully considered entry zone can put patients at ease while sending a powerful branding message for your healthcare client. Our experts show how to do it through four project case studies.
