BremnerDuke's Taylor

GlobeSt.com:Why should we expect to see a boom in medical space development?

Taylor:Well, you've got old baby boomer statistics, every 60 seconds a person turns 60 years old in the United States. Also, with the passage of new bill, the belief is that more patients will seek out doctors, and it won't be for emergency room visits. I think the popular figure that's being talked about is 30 million more people will see doctors than before. In many areas, such as Chicago, we believe there is a strong demand for more medical office space.

GlobeSt.com: Are we starting to see movement yet by hospitals?

Taylor: Absolutely. There are hospitals that waited out the two years of downturn and uncertainty, and now in the past six months we've seen a big increase in hospital projects. You've got Clarian Health in Indianapolis talking about a $375 million to $500 million new tower, and there's the more than $1 billion of expansion discussed by Henry Ford Health System and the Detroit Medical Center in Detroit.

GlobeSt.com:Are there alternatives to new development?

Taylor: If there's office space empty around a hospital, it's a good chance that property will have some demand as medical space. You see going on in the Chicago area now, and in other markets, we just redid about half of a 363,000-square-foot office building in Atlanta into medical offices. It makes sense; rates are higher for medical office space, it's not that difficult to do a changeover.

GlobeSt.com:With new demand, are rates going to change?

Taylor: Well, there's a new factor – the way we think about medical space is probably going to have to change. It used to be that you would allocate 12,000 to 13,000 square feet per physician, but groups want to get more efficient, you are probably going to see that go down to 1,000 square feet per doctor or less. The prediction is that we'll see 60 million square feet of new office space, but I think that needs to be reanalyzed based on the new efficient model.

GlobeSt.com:Can health care, one of the only growth industries right now, be the Midwest's saving grace?

Taylor: It's too early to tell how this is going to play out. We hear that lenders still haven't really loosened up access to debt yet, for now health care REITS are now really the best source of capital. And sales of properties still haven't really started, with hospitals not sure this is the right time to be buying or selling.I don't think health care will ever be a major region driver like the automotive industry. There is going to be some expansion, but there will be some consolidation as well. There will be increased numbers of people that need to be cared for, but I don't think that these projects alone will be enough to pin economic hopes on.