Medical Real Estate Construction Pipeline at $97.1 Billion – 10 Insights from Revista’s US Construction Report
A new report released by Revista shows that the healthcare real estate construction pipeline is active and growing. Overall, Revista reports the total construction pipeline at $97.1 Billion at year end 2015; this is up 12% from $86.7B during the first half of 2015. The report covers hospital and medical office (MOB) construction projects that are new, expansions or replacements, greater than 7,500 square feet and $5 million in value. Here are 10 key takeaways from the report.
1. Construction across the US is shifting. Overall, the healthcare real estate sector will complete construction on 43.7 million square feet (MSF) of space in 2016. This is roughly equal to 2015’s figure of 43.6 MSF. Within these figures though, hospitals are expected to see completions fall from 30.7 MSF n 2015 to 19.9 MSF in 2016. MOB completions, on the other hand are expected to rise from 12.9 MSF in 2015 to 23.9 MSF in 2016. This data supports the notion that healthcare is moving towards outpatient settings.
2. There are over 1,200 projects in the construction pipeline. The report shows 1,270 projects in the construction pipeline across the US with approximately 138 MSF and $97.1B in value. The construction pipeline is defined as projects under construction or late in the planning stage.
3. Construction vs. Inventory currently stands at 4.8%. Revistamed.com also tracks the entire inventory of hospitals and medical office buildings. When the amount of square feet in the construction pipeline is measured against the current inventory, it equals 4.8%. Hospitals have a higher relative amount of construction at 6.2% of existing inventory while MOB construction vs. inventory is 3.3%.
4. Expansions are the name of the game in hospital construction projects. Of the 691 hospital projects under construction across the nation, 519 (or 75%) are expansion projects. The remaining 25% are new hospitals and replacement hospitals.
5. Who says there are no new hospitals? Revistamed.com is currently tracking 124 new hospitals under construction. These hospitals comprise approximately 30 MSF and $24.1B in value. The average hospital under construction has 87 beds compared to 210 for all hospital construction projects.
6. The majority of MOBs under construction are “off campus”. Of the 597 MOB projects in the construction pipeline, 416 (or 72%) are not on a hospital campus. This again shows that providers, health systems and developers are pursuing a strategy of brining medical care into the community.
7. There is health care real estate construction in every state. The state with the largest construction pipeline is California. It has 116 projects under construction comprising 13.6 MSF. Texas (109 projects), Florida (92 projects) and New York (66 projects) have the next largest construction pipelines.
8. Within the top 10 metro areas of the US, there are 124 hospital and 153 MOB projects under construction. Of the 10 largest metros, Washington DC has the largest construction vs. inventory pipeline. DC’s hospital construction pipeline is currently 7.5% of existing inventory while the MOB construction pipeline is 7.6% of existing inventory.
9. Notable hospital projects scheduled to complete in 2016 include the UC San Diego Health Jacob Medical Center. The project is a $943-million, 245-bed medical specialty center, named in recognition of a $75-million gift from the Joan and Irwin Jacobs family and is scheduled to open in the fall of 2016. The Stamford Health Replacement Hospital is also scheduled to complete in 2016. It is billed as a $450 million state of the art medical center that will feature private rooms, a Heart and Vascular Institute, a greatly expanded Emergency Department and other enhanced units and features.
10. Notable MOB projects scheduled to complete in 2016 include the 360,000 square foot Brigham and Women’s Brigham Building for the Future. The project will have three floors for outpatient visits, eight floors of laboratory space to foster collaborative and translational science and one floor dedicated to advanced imaging capabilities. The Baptist Health Miami Cancer Center is scheduled to open in 2016. The $430 million project will feature the first proton therapy treatment center in south Florida.
Data Source: Revistamed.com 2015 Year End US Construction Report.