Clearly there are strong opinions--both by opposition and advocates--about the bill. For the commercial real estate industry, ironically enough, the consensus about what the bill means for medical product is still unclear, save for a few basics.

For instance, quite obviously the bill will grow demand for primarymedical services, says Northmarq's Jim Kornick. "That will be good formedical office buildings in the long run," he tells GlobeSt.com. "In the short run, it means squat." That is because there are so many other variables at play in this hyper-complex issue. There is a deficit of doctors available for primary care, as one example, and little sign that that will change. How that will factor into demand for medical office buildings, is hard to say, according to Kornick.

Another unknown is how this will affect the pharma industry and thesubsequent impact on real estate that fall out, if any, will have."There are a lot of moving parts to this, any one of which couldsignificantly move the needle for commercial real estate," Kornicksays. "Frankly right now everyone is the business is going around in circles about what it means," says the medical office building specialist.

Certain extrapolations can be made, of course, based on such states asMassachusetts and Vermont that have passed similar forms of universalor near-universal health care. According to Jeffrey H. Cooper, who specializes in medical office properties and health-related facilities, as executive managing director with Savills, based on the standard industry multiplier--which calculates that each new outpatient requires 1.9 square feet of new medical office space--30 million added insured people would ultimately trigger construction of roughly 57 million square feet of new medical facilities. Even if the numbers don't pencil in exactly, it is clear there will besome increase in demand and development, he tells GlobeSt.com.

There will also certainly be an increase in demand for financing fromthird party sources, Cooper adds. The natural parties to step in hereare REITs--particular those that specialize in medical products, suchas Health Care REITs--that have been raising capital for the lastyear, with little investment opportunities on the horizon.

The one certainty this bill does deliver is that the uncertainty gripping medical commercial real estate for the past yearis over. "This was supposed to be passed six months ago," Kornicksays. "When it wasn't, it sent developers and investors intolockdown."

A lot of investments by hospitals, for example, can now move forward,Cooper agrees. "The uncertainty has been terrible for medical officebuildings because it has been difficult for doctors to know what theirbusiness model would be and therefore they were hesitant to makelong-term commitments."

Instant Insights /

Industry Gauges Healthcare Bill's Impact

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