TAMPA, FL—Obamacare has implications that stretch far beyond the healthcare sector, and early signs indicate that Tampa Bay’s real estate market may be a big winner. So says Chad Rupp, managing director for Jones Lang LaSalle (JLL) in Central Florida.
To be sure, Tampa has long been a hub for the healthcare and insurance industries, thanks in large part to the availability of a skilled and trainable labor force. JLL estimates about 30 percent of the net new jobs created in the past year have come in this industry.
“Now there are signs that the healthcare sector’s share of the office market is growing following the 2010 passage of Obamacare,” Rupp says. “That will extend insurance coverage to more than 30 million additional Americans and expand the operations of healthcare providers and the third party administrators that serve them.”
JLL research shows that healthcare related tenants have nearly doubled their presence in the Tampa Bay region, from around 12% historically to more than 23% of total leasing volume. The firm expects this market share growth to continue given that healthcare users account for more than 20% of all active requirements in the region’s office market.
Managed care providers and third party administrators account for the bulk of this volume, including some of the largest leases of the past year: Medco Health Solutions’ 143,000-square-foot renewal, Amerigroup Insurance’s 95,000-square-foot lease, and WellCare Health Plans’ 66,000-square-foot expansion.
“The extent to which these users will continue scaling up their space requirements as the law takes effect will remain unknown until final enrollment numbers are determined,” Rupp says. “This has left some of the Tampa market’s largest companies in ‘wait-and-see’ mode less than one year before enrollment under the new law begins on Oct. 1, 2013.”
Rupp offer an example: one major third party administrator in the Tampa market plans to hire anywhere between 250 and 1,600 new employees depending on enrollment volume next fall. Complicating this lack of predictability is the need for training employees 30 to 60 days prior to open enrollment, he says, which will force tenants to lease space before knowing their long-term office requirements. This uncertainty is leading users and their brokers to get creative.
“Plug and play office spaces offering large, flexible floor plates that can accommodate scalable call centers are in high demand. Tenants are also evaluating the benefits of multiple site operations,” Rupp says. “And some users are willing to pay a premium for office product adjacent to empty space, with the option to expand in 2014. We also expect to see instances of adaptive reuse that converts vacant retail product with ample parking capacity into functional office space.”
Rupp’s conclusion: Anticipation leading up to next fall is fueling high hopes for healthcare companies and all indications point to the Tampa office market being a primary beneficiary of business growth. This surge of activity is making a measurable impact in a city and state still rebounding from the recession.