Tuesday, October 13, 2015
Last Updated: December 8, 2012 11:11am ET

Medical Office Budgets, Space Needs Growing

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San Diego County is home to
10 million square feet of
healthcare space, the panel

SAN DIEGO-As healthcare reform revises traditional medical-office models, healthcare users’ space needs are also shifting. GlobeSt.com recently reported on these shifts in healthcare facility use.

Quickly fading are solo practitioners and single-specialty practices in small offices as larger multi-specialty groups move in and redefine the medical office, said panelists at a recent NAIOP San Diego discussion here.

According to Paul Braun, SVP of Colliers International, who served as moderator of the panel, aging facilities and a move toward managed-care systems for the past two decades have caused consumers to pay more attention to the location and condition of the facilities they use for healthcare. Third-party owners and developers became more involved in real estate needs and began joint ventures with hospitals for new campuses and for refurbishing existing facilities.

Technology advancements have also dramatically affected the healthcare industry’s use of real estate. The large, multi-specialty medical groups that are replacing solo practices are requiring more in-office information technology as well as more space in general to house the larger groups, which means that medical-office budgets are growing, according to panelist Dr. Robert Matthews, chief technology officer at the West Health Institute. On the retail front, he said that more mini clinics will be situated in existing retail space and will become more prevalent so that patients do not have to travel outside of their neighborhoods for care.

Meanwhile, legislated seismic standards that must be in place by 2030 will result in major construction opportunities, the panelists revealed. For many older facilities, it is simply easier to guild new hospitals than to try to upgrade existing ones. Statewide, more than 200 hospitals will need to be replaced, and in San Diego, this trend is already in play as three of the top four current large construction projects in the county are healthcare related.

The panel also discussed that despite the aging population, the number of hospital beds needed in the county is likely to stay the same as technology decreases the overall need. Technology does require an increase in the size of operating rooms and other treatment facilities, however, especially due to the use of robotic devices. San Diego County is currently home to 10 million square feet of healthcare space.

Panelists Tim Smith, SVP and CEO of Sharp Memorial Hospital, and June Komar, corporate EVP of strategy and administration for Scripps Health, agreed that growth in healthcare will mirror population growth. Both consider northern San Diego County to be a growth area for their healthcare systems, with Smith adding that more space needs to be zoned for healthcare growth throughout the county.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the West Coast region of GlobeSt.com and Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.

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