WHITE PLAINS, NY—Medical office and healthcare facilities are the wave of the future in Westchester commercial real estate. That’s the message of industry experts scheduled to speak at RealShare Westchester Thursday, who note that the sector is the safest bet in the County thanks to a lack of new supply in general office space and rising demand for medical services.
“We’re seeing increased demand because of mergers and acquisitions of major health care facilities—like Montefiore Hospital coming into the suburbs and partnering w/White Plains Hospital,” says Al Guttierez, executive managing director, Colliers International.
The consolidation actually is leading medical practices to grow, explains Mark Ellman, president, Celestial Capital Group. “A 2,000-square-foot practice with a couple of doctors is going to move into a 20,000 to 50,000-square-foot office” when it becomes a multi-specialty practice, which has become commonplace in an effort to reduce costs and increase tenant convenience. “Everyone is busy and it’s convenient when you can go to a general practitioner and walk down the hall to see a gastroenterologist, allergist, etc.,” notes Guttierez.
Also driving the surge is an increased need for healthcare services, both industry experts note. “Medical services is growing in the county,” Ellman says. “That’s not unique to Westchester; the demand nationwide is due partly to the aging baby boomers, as well as growth of federal programs such as Obamacare.”
So how can CRE investors and developers maximize their gain from this growing sector?
“By bringing in bio-technology firms and other medical business,” suggests Ellman. “Overall, Westchester is over-officed and it’s a stagnant market, plus it has an aging inventory, with most construction going back to the 1960s and 1980s. One way to deal with that is re-purposing for medical, which is not stagnant.”
Still, developers must bring innovative projects to the table to attract the medical segment, notes Gutierrez. “We need more of the live, work, play environment. Forest City Ratner did that at Ridge Hill in Yonkers. There’s retail, entertainment, restaurants, office and residential and Westmed—a medical tenant that has committed to 80,000 square feet—is one of the largest office occupiers at the complex because it saw the value of being in such a setting.”