Date: September 05, 2018
By: Erika Morphy
Supply Is Not Close to Meeting Medical Office Demand
Transwestern estimates that total demand for medical office space across the US could range from 150.5 million square feet to 225.8 million square feet by 2019.
There is an estimated 110 million square feet of available medical office space either in existing buildings or those under construction as of the second quarter of this year. This supply is not nearly enough to meet demand through 2019, assuming healthcare practitioners want to locate in a medical office building. This is according to a new analysis by Transwestern, which does also offer a few caveats to this scenario.
One, medical practitioners could explore leasing space in conventional buildings or accelerate the trend of repurposing empty retail space for medical uses.
Two, this future demand is a bit uncertain as the emergence of new forms of healthcare such as telemedicine, digital health and shared service centers could change the dynamic depending on how quickly these new approaches are adopted by the healthcare industry.
That said, the macroeconomic trends behind these projections are undebatable: there is a swelling demand for healthcare services as the age 65-and-older cohort will rise to just over 56 million by 2020, Transwester said in its report. This represents an annual growth rate of 3.5%, which is approximately 14 times the rate of those aged 64 and older.
To state the obvious: as this age bracket grows, it will drive physician growth and the subsequent need for medical office space.
Breaking Down the Math
Transwestern breaks down the math in its report. Current projections estimate that just over 150,000 healthcare practitioners will be added to the economy over the next two years. The required space demanded by most practitioners ranges from 1,000 square feet to 1,500 square feet, per MedScape. “Therefore, total demand for medical office space across the US could range from 150.5 million square feet to 225.8 million square feet by 2019.” And as noted earlier, there was an estimated 110 million square feet of available medical office space as of the second quarter of this year.