Gone Are the Days of Small Dr. Offices

NEW YORK CITY—Years ago you would go to building or a small office building. Now that type of practice no longer exists. That is according to locally based Michael Dublin, a partner in the New York City office of Savitt Partners.

GlobeSt.com: What have been some of the health care changes affecting the industry and consequently the real estate requirements of this market segment?

Michael Dubin: What we are seeing now is a continuation of a trend that started several years ago: A large number of doctors and specialists around the country are leaving private practices and joining large institutions. In many cases these newly formed networks are the ideal one-stop-shop for many medical needs. As a result, smaller office space once occupied by the solo practitioner now beg for doctors, while the requirements for large office space near existing hospital centers are skyrocketing across the nation.

Also, the President's much-debated healthcare plan (Obamacare), which has provided insurance for an additional 30 million previously uninsured Americans, is creating competition between medical professionals as well as putting strain on services which were not felt before.

GlobeSt.com: What areas/regions of the country are these changes more prevalent?

Dubin: While my practice is mainly focused on the northeast, the consolidation trend is happening across the country.  Specifically, New York, Boston and Philadelphia, three major medical centers with some of the world's top doctors and hospital systems, are now the focal point of many of these mergers.

GlobeSt.com: How is the real estate market reacting and serving health care tenants?

Dubin: As I mentioned, due to the mergers, healthcare networks and institutions are looking for larger space to accommodate their rapidly growing practices. While, a few years ago it was the norm to see doctors' offices of 1,500 to 2,000 square feet at the base of a residential building, these practices are now disappearing. With individual doctors being brought into these bigger healthcare and hospital networks the need is obviously for much larger space.  The healthcare industry is now competing directly with office tenants for the same, high-quality space. In fact, we are even seeing landlords converting portions of their buildings to medical offices.

GlobeSt.com: What do you see in the future of this market segment and any upcoming trends you see on the horizon?

Dubin: I think we are going to continue to see healthcare institutions growing from within and being housed in one or several larger spaces. One new twist we are beginning to see is more allied professionals brought into this same space.  Psychologists, chiropractors, podiatrists, physical therapists, social workers, and other specialists are all going to be under the same umbrella. The group of doctors a person sees are not only going to become closer in terms of physical space but also more aligned and managed by a single practitioner or gatekeeper. As a result, the use of the traditional doctors' office space will continue to evolve.