Need for medical office space likely to grow
Released: 1/6/2010
Healthcare reform, changing demographics and a continuing shift to outpatient care will drive
greater demand for healthcare facilities, according to BremnerDuke Healthcare Real Estate
INDIANAPOLIS, Jan. 6, 2010 – There will be a significant increase in both short- and long-term demand for medical offices and outpatient facilities, predicts one of the nation’s oldest and largest healthcare real estate firms.
Three converging trends will drive growing demand, according to BremnerDuke Healthcare Real Estate, the healthcare facilities development arm of Duke Realty Corp. (NYSE: DRE). The firm’s 20-year-old healthcare unit specializes in medical office buildings (MOBs), ambulatory surgery centers and other outpatient facilities.
First, anticipated healthcare reform will result in a greater percentage of the population having medical insurance coverage. Therefore, more individuals will likely seek regular medical care. Demand for medical providers will increase to meet the healthcare needs of the newly insured. This will heighten the need for medical office space. Some projections call for adding as much as to 61.9 million square feet of additional MOB space, based on the current ratio of 1.9 square feet per insured individual.
The second factor impacting medical space needs is the continued increase in population by older age groups. During the past decade, per office visits for 45- to 64-year-olds have grown by 7 percent. A greater number of insured people in this age group as a result of healthcare reform will elevate physician office visits by 12 percent.
The third factor is the movement to have patients treated in an ambulatory care setting as opposed to emergency rooms. Proposed healthcare reform includes an allocation for prevention and wellness intervention, placing a stronger focus on primary care physicians.
During the past two years, BremnerDuke medical office properties have performed favorably, with occupancy remaining near 90 percent,” says Deeni Taylor, Executive Vice President, BremnerDuke. “This strong performance, along with the emerging trends, has prompted us to allocate additional human and capital resources to meet this increased demand. During the past year, Duke Realty has been successful in raising more than $1.5 billion in capital, which will enable us to efficiently take advantage of these opportunities.”
BremnerDuke is concentrating on cultivating relationships in markets where demographics point to strong projected growth. In the 20 markets where Duke Realty has a strong presence, the firm is leveraging its healthcare expertise and experience to develop relationships with local hospitals. BremnerDuke has also focused on developing strong relationships with regional and national healthcare systems across the country.
“Given our strength in capital and people, and the forecast for healthcare space needs, we believe we will be able to successfully attain our objectives to grow the healthcare portfolio by $1 billion over the next five years,” Mr. Taylor says.
About BremnerDuke Healthcare
BremnerDuke Healthcare Real Estate supports hospitals and physician groups with development, ownership, leasing and management services. A division of Duke Realty Corp., BremnerDuke has been building healthcare facilities for more than 20 years with projects ranging from small medical office buildings to large healthcare centers with diagnostics, oncology centers and surgery centers. BremnerDuke, formerly known as Bremner Healthcare, was acquired by Duke Realty in February 2007 as a result of Bremner’s proven success and creativity in developing healthcare real estate. To find out more, please visit www.bremnerduke.com.
Contact: Rachel Ferguson | Email