Construction Industry

Healthcare Real Estate Trends to Watch

Healthcare and Medical Center Real Estate

Duke Realty owns and operates approximately 142 million rentable square feet of industrial and office assets, including medical office, in 18 major U.S. cities and their healthcare team offers planning, development, ownership and facility management services to hospitals and physician groups.  They recently posted an article listing their six healthcare real estate trends to watch in 2013 and they believe the “the healthcare industry and healthcare real estate have changed dramatically in the past several years.  Healthcare reform, the recession, lower reimbursements and other issues should continue to drive changes, including new uses of medical office space; creative, new partnerships; and an increase in monetization of outpatient facilities”.  The following trends are what Duke Realty expects hospitals and health systems should see in the coming years:

  • Higher-acuity care will increasingly move to medical office buildings (MOBS).
    • MOBs cost less to build, operate and maintain than hospitals.
    • These could improve consumer’s access to healthcare since they will be in suburban areas.
    • “Real estate implications:  These outpatient facilities will need to be designed to a higher, more sophisticated standard than typical MOBs”.
  • Freestanding emergency departments (FEDs) will be used in new ways.
    • According to Don Dunbar, Executive Vice President of Duke Realty, “More and more, we’re seeing for-profit ED companies competing for the 7/11, Walgreen’s and McDonald’s sites”.  Basically for-profit companies are targeting high-traffic, retail-orientated sites.
    • FEDs are not necessarily being created as the first step toward a future hospital campus.
  • Partnering will increase.
    • Partnering will increase so hospitals can broaden their range of services and improve quality of care.
    • Brand-companies will benefit by extending their brands into new markets.
    • “Real estate implications:  New, expanded or renovated “branded” facilities might need to accommodate these partnerships”.
  • The case for hospital-driven monetization will keep getting stronger.
    • Duke Realty says “there continues to be tremendous investor demand for MOBs and plenty of capital is available,[so] this could be the year…[for] an increase in hospital-driven monetization of MOBs”.
    • Money generated from monetization could help fund hospital mergers and acquisitions.
    • “Real estate implications:  More MOBS might be coming on the market”.
  • Repurposing will expand.
    • Offices, retail, industrial space and even grocery stores will be repurposed for medical use and become a prevalent healthcare strategy.
    • “Real estate implications:  There’s still plenty of potential new life for former retail and office buildings”.
  • Compliance will become even more vital.
    • Due to the healthcare reform that passed in 2010, “healthcare providers are now required to self-report to the Centers for Medicare & Medicaid Services (CMS) any violations” of the new legislative laws.  If providers don’t self-report, they could be fined, face prison or be forced to repay disqualified claims.
    • “Real estate implications:  More and more healthcare providers may decide to minimize their compliance risk by monetizing their MOBs”.

2013 Economic Outlook for North Carolina

2013 Slight Economic Uptick

Dr. John Connaughton, a Babson Capital professor of financial economics, reports quarterly forecasts for North Carolina. In December, according to the Belk College of Business’s webpage, “he presented his quarterly forecast to more than 130 members of the Charlotte business community and the media at a luncheon held at UNC Charlotte’s Center City Campus”.

Connaughton discussed his 2013 projections, which included an expectation that North Carolina’s economy will expand “by an inflation-adjusted rate of 1.8 percent”. He also expects 14 of North Carolina’s 15 economic sectors to experience output increases, with the strongest growth expected in the business and professional services sector and the transportation, warehousing and utilities sectors. The agriculture, retail trade, and information sectors and the durable goods manufacturing sector are also expected to experience strong growth at approximately 2.3 and 1.9 percent respectively. He also expects employment increases in 10 of North Carolina’s 14 nonagricultural sectors of the economy, during 2013.

According to Connaughton, “for 2013, the economy is expected to continue the 2012 pattern of modest GSP growth”. Overall, he reports the state “will have its fourth year of slow, but uninterrupted economic growth in 2013”.

Good Resource for Business: SBA’s Affordable Healthcare Webpage

Good Resource for Business

According to the SBA, “The Patient Protection and Affordable Care Act enacted comprehensive health insurance reforms designed to ensure Americans have access to quality, affordable health insurance”. The details of the Affordable Care Act can be found at the SBA’s Healthcare webpage. The webpage provides important information about the Affordable Care Act and what the law means for small businesses. It lists the key provisions of the ACA and explains how the size of your business determines which provision will apply to you. It also lists a glossary of key healthcare reform terms, a timeline of the ACA Insurance reforms, and specific ACA information in your state.

The webpage also includes in an informational blog about the top three things all small businesses should know about the Affordable Care Act, including details about small business tax credits, affordable insurance marketplaces, and employer shared responsibility provisions. Overall, the SBA’s Healthcare webpage is excellent resource for business, because it explains everything a business owner needs to know about the new Affordable Care Act.

Good News for the Charlotte Construction Industry

Charlotte Jobs Market

According to the AGC, “the Charlotte metropolitan area gained roughly 2,200 construction jobs last year, while North Carolina lost nearly 4,000 during 2012, according to non-seasonally adjusted figures”. This was due to private sector demand for energy, health care, higher education and residential construction. While the overall construction employment in many metro areas is suffering from declining demand in the public sector and a lagging private sector market, the Charlotte area’s jobs grew by 6 percent, “ranking the city 43rd out 337 in terms of growth”.

In South Carolina, however, the outlook for new construction jobs is dim, with 100 percent of companies saying they plan to add 5 or few employees in 2013. The majority also has low expectations of construction market growth in 2013, with 91 percent believing it will not grow until 2014 or later.

So, it appears that Charlotte’s construction industry is the strongest in the Carolinas right now, and with North Carolina’s expectations higher for 2013, it is probable that the construction industry in Charlotte will only continue to grow.

Most Family Friendly Ranking: Great for Business

 

Raleigh and Charlotte Rankings Good for CRE and Construction IndustryRaleigh and Charlotte Top Rankings Good for CRE and Construction

The Human Life Project is a nonprofit organization that encourages cities to invest in families and to identify and reverse negative trends before they become even bigger issues. Every year, this organization takes the 50 largest cities in the U.S. and ranks them according to how family friendly they are; one being the most family friendly, fifty being the least. The rankings are based on a variety of factors including marital status, age demographics, available housing and home prices, unemployment, crime rates, median income, and availability of parks, museums and places of worship. Well, the results are in, and this year, Charlotte was ranked #4 and Raleigh was ranked #1!

This could be great for North Carolina’s state and local economies; since people generally like to feel safe in their environment and secure in their jobs, they might feel more comfortable moving to Raleigh and Charlotte, rather than cities with lower rankings. So, more people means a larger economy, more jobs, more shopping, more housing, more services, more everything! Having these rankings is not only good for families, but it’s good for commercial real estate, retail, construction, and business in general. If you’re a company looking to expand, this might be your opportunity to find some highly qualified employees to grow with you!