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How Are Healthcare Trends Affecting Commercial Real Estate?


Posted: November 09, 2017 by Rebekah Holten

For most of us, it is difficult to think of healthcare in the United States as a business. However, it is indeed a business, and in the United States it is a multi-million-dollar economy. It is no wonder why healthcare is constantly a source of scrutiny for political and economic trends.

But how do political and economic trends surrounding healthcare as a business affect practical details like real estate?

DEMOGRAPHICS:

One of the largest impacts on any real-estate or business trend is the economic concept of supply and demand. With life expectancy increasing year after year, the demand for more and more healthcare resources has responded proportionately.

 

This demographic trend of increasing age means greater medical needs and an increased need for medical services. As the demand for medical services increases, the demand for office spaces, service providers, and labs also increase making the need for commercial real estate go up. The higher density of these needs are within cities where the populations are higher.

AFFORDABLE CARE ACT

When President Barack Obama signed the Affordable Care Act into law in 2010, the entire healthcare landscape was overhauled. Suddenly, millions of people who had previously been uninsured or had aged out of their parents’ coverage were able to sign on to coverage under Obama Care.

Even after President Trump signed a repeal as an executive order of the Affordable Care Act (ACA) and instructed federal agencies to use "all authority and discretion available to them to waive, defer…or delay the implementation of any provision … that would impose a fiscal burden on any State or … individuals" any real changes to the coverage provided by Obama Care has yet to be seen.

What this means is that millions of people who were once uninsured and unable to receive ongoing or preventative care have suddenly gained access to that care.

    

As illustrated by the graphs available by healthinsurance.org, the number of uninsured population went from 13.6% of the population to 9.9% of the population in only 1 year. With legislative demands for coverage, the number of uninsured has increasingly decreased over recent years in spite of constant political scrutiny. Again, this increase in demand directly affects the healthcare services which in turn directly impacts the demand for healthcare real estate.

Overall, the basic economic concept of Supply and Demand can clearly demonstrate the effects of Healthcare trends on real estate. As long as people are living longer and in need of healthcare services and more people are receiving coverage for health care services, the demand for commercial real estate options to serve those increases will follow suit.

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