Mike MacKinnon is pleased to report that hospitals are building urgent care and primary care centers. He’s equally happy to report that doctors are opening new offices and that senior-care facilities are going through renovations and updates.
Yes, healthcare activity is strong again across the Midwest.
“Healthcare has always been a different sort of market,” said MacKinnon, director of development with Chicago’s Bluestone Healthcare Partners. “At the end of the day, everyone needs healthcare. With residential, you don’t need to buy a house. You can always rent. The industrial market can contract if there’s a decrease in manufactured goods and a decrease in consumption. Retail obviously takes hits when there’s a reduction in discretionary spending by consumers.”
Healthcare, though, is largely immune – though not entirely – to fluctuations in the economy.
“There’s only so much you can defer when it comes to healthcare,” MacKinnon said. “You can put off cosmetic and elective surgeries. But when you break your leg, you need to go in and receive care.”
The healthcare market isn’t recession proof. Developers will tell you that hospitals and medical groups have slowed their plans for new facilities since the recession hit in 2007.
But this market segment is far more protected against the ups and downs of the economy than are the industrial, retail or office sectors.
MacKinnon is happy about this, of course.
But he and others did receive a scare in 2010. You can blame it on the politicians.
The healthcare legislation scare
Once the long-awaited Obama healthcare plan became a reality, it had a definite chilling effect on the commercial healthcare market.
As MacKinnon says, business in his industry stopped.
“The healthcare market froze for about six months in 2010,” MacKinnon said. “After the healthcare legislation passed, no one understood how to interpret what happened. Some thought that portions of it or all of it would be repealed. No one wanted to make any big decisions.”
The market has since thawed. MacKinnon said that he’s now seeing a flurry of activity across the Midwest. People, after all, are still getting older. They’re still getting sick, and they’re still breaking bones.
That six-month slowdown, though, is just one example of how Congress can impact commercial real estate: Politicians and their policies can have a huge impact on the commercial real estate market.
Serving an aging population
One of the reasons for the continued health of the healthcare market is the lack of health among so many in the population.
Simply put, the United States is getting older, especially with the Baby Boomers reaching their retirement years.
These older citizens need more access to healthcare. And that demand is causing hospitals to expand, open emergency care areas in rural areas and even open their own continuing care centers for older residents.
It’s also why there is such a demand in the country for senior care facilities.
And people don’t just want traditional nursing homes. Today’s senior centers can be as chic as any apartment complex in downtown metropolitan areas. They feature a wide range of services, from the most minimal of care to hospice care.
Many older senior centers today are going through the renovation process, updating themselves to meet the needs of today’s new breed of senior citizens.
Renovating a nursing home isn’t the easiest task. Just ask Doug Wells, principal of Des Moines-based architecture firm Wells + Associates.
Wells’ firm designed the $4 million renovation of St. Francis Manor, a continuing care retirement community in Grinnell, Iowa. The renovation, for which construction crews broke ground in December of last year, will include the renovation of all resident rooms, a new dining area and kitchen, expanded visiting areas and a 3,200-square-foot office addition.
Plans also call for a complete renovation of the facility’s social center and updated space for physical therapy programs.
The biggest challenge lies in pleasing both staffers at the facility and its residents, Wells said. And that’s something that required a lot of close communication throughout the design process.
“We had a lot of conversations with the staff to see how they did their jobs,” Wells said. “We had to understand what they needed to best be able to care for the residents. We wanted to design spaces that allowed staff members to do the best job they could in taking care of the residents.”
Such work is important in today’s commercial real estate business. While many sectors of the industry continue to struggle in today’s slow economy, healthcare facilities and, especially, senior continuing care centers continue to be in high demand.
Dion Schrack, executive administrator of St. Francis Manor, said that the time had come for improvements to the facility.
“I’ve been here 29 years. When we started, we had a 51-bed facility providing intermediate care. Now we are a 78-bed skilled nursing facility,” Schrack said. “We help people with knee and hip replacements. We have 135 retirement homes on campus. We are now helping 250 people. So our facility is now five times larger. We have simply outgrown our facilities.”
Expanding in the suburbs
Looking for another hot trend in the healthcare business? Turn to the suburbs.
A growing number of hospitals and medical centers are opening freestanding emergency care centers and walk-in clinics in suburban areas that are located far from hospitals. This gives the residents of these areas better access to the medical care that they need.
For instance, in early January, the Illinois Health Facilities and Services Review Board gave its approval to Aurora, Ill.-based Rush-Copley’s plans to build a Freestanding Emergency Center on the site of an existing walk-in healthcare center that the hospital already operates in suburban Yorkville in Illinois’ Kendall County. The plan is for this new facility to open in the Spring of 2012.
“Right now, Kendall County doesn’t have a hospital,” said Nancy Wilson, vice president of ancillary services with Rush-Copley. “The freestanding emergency center concept is designed to bring emergency medical care to residents living in areas that are a little bit more rural.”
The emergency center will be open 24 hours a day, seven days a week, every day of the year. Certified emergency physicians and emergency nurses will staff the center.
The emergency center will cost $6.3 million to build and will cover 6,415 square feet. The center will treat patients who need emergency care because of ailments such as broken bones, burns and allergic reactions. Patients suffering from more serious injuries or illnesses, such as heart attacks or strokes, would be transported to a nearby hospital emergency room.