Irgens recently developed a new 45,000-square-foot $9 million medical office building for Vista Health System in Lindenhurst, Ill.
We’ve all heard that healthcare is recession-proof. Problem is, this isn’t really true.
Yes, people need to see doctors when they’re sick, whether they’re in the middle of good economic times or bad. But they don’t have to spend money on elective surgeries during down times.
And it’s this discretionary healthcare spending that has diminished during the recession and its slow recovery, something that has had a significant impact on hospitals and medical providers.
This slowdown in elective procedures has caused many medical providers to change long-established habits, said two leaders with Irgens, a real estate firm with Midwest offices in Milwaukee and Chicago.
As an example, today medical providers continue to go to their patients rather than making these patients come to them. The rise of outpatient and ambulatory care centers is one of the strongest trends in this segment of the commercial industry.
“It’s all about accessibility to patients,” said Brian Spoerl, a vice president with Irgens. “Instead of making patients come to them, they are going to the patients. They are opening this outpatient centers that are like hospitals without beds. And it’s helping hospitals expand their service areas.”
Medical providers are taking more care, too, when they actually build new facilities to not include any unneeded space, said Kris O’Meara, executive vice president with Irgens.
“The trend 10 years ago was for hospitals to build extra space into their projects so that they could easily grow,” O’Meara said. “Now, these medical providers are right-sizing from the start. They aren’t including, or paying for, that extra space.”
It’s unclear what the future holds for this commercial segment. But if what O’Meara and Spoerl say is true – and you can read their comments on the healthcare sector in the next issue of Midwest Real Estate News – medical providers will continue to grow, but they’ll do so in a more measured manner.
“Providers are now looking at each particular market to determine what is right for that area,” O’Meara said. “If what that area needs is an outpatient care center, then that’s what the provider will build. If an area needs Class-A medical office space, then that’s what a hospital will provide.”
– Dan Rafter
