- Growing demand for healthcare services could spur a shortage of medical office space in some U.S. markets, a new report by commercial real estate firm Transwestern warns.
- Current projections anticipate an additional 150,000 new healthcare workers over the next two years, with a subsequent need for more office space. Transwestern puts that need at somewhere between 150.5 million and 225.8 million square feet nationwide by the end of next year.
- The situation could be a plus for telemedicine and digital health sectors as providers look for alternative care delivery options to meet patient needs.
Fueling a potential office shortfall is an aging population in need of more healthcare services, necessitating additional clinicians and more office space.
The share of Americans 65 and older is expected to hit 17% by 2020, growing at an annual rate of 3.5% or 14% faster than those under age 65. Healthcare spend is rising 5.2% a year, with older Americans consuming an ever greater portion of medical services.
Markets with the tightest projected margins for office space include Atlanta, Dallas-Forth Worth, Denver, Miami-Fort Lauderdale, New York and Washington, D.C.
"There is approximately 110 million square feet of available medical office space in existing and under-construction buildings in the U.S. as of the second quarter of 2018," Elizabeth Norton, director of research at Transwestern and the report's author, said in a statement. "If all healthcare practitioners added to the economy through 2019 aim to locate within medical office space, absorption of this demand is impossible without a major shift in how people expect and receive healthcare."
To alleviate the crunch, healthcare practitioners could lease space in conventional office buildings or look into repurposing empty retail space for medical use, according to the report. Virtual care, digital health and shared service centers could also ease demand if adopted widely enough.
A growing number of startups are focusing on technology and home health approaches to identify gaps in care in the older population and help seniors age in place for as long as possible. Landmark Health, for instance, developed an in-home, risk-based medical group focused on the elderly and chronically ill. The company, with financial support from growth equity firm General Atlantic, currently has about 75,000 patients and hopes to penetrate 20 markets across 13 states by the end of 2018.