With the Supreme Courts affirmation of the Affordable Healthcare Act the nation is expecting to see 35 million more insured people filter through the healthcare systems.  We will see increased demand for healthcare professionals and the facilities in which they work.  Healthcare systems and physician groups have been planning for this change since it originally passed in 2009.  We have been seeing how the changing healthcare industry will impact commercial real estate.

Over the past couple of years we have seen the major healthcare systems and physician groups acquire individual practices as the new legislation and requirements is making it more appealing for individual practitioners to align themselves with larger groups to take some of the burden related to billing and reimbursements off their shoulders as well as benefitting from a stronger referral base and resources.

What does this mean for commercial real estate? We have seen institutional investors aggressively pursue the acquisition of medical office buildings both in Metro Detroit and across the country. Recently Healthcare Trust of America, a real estate investment trust acquired the 203,000 square foot medical office building located at Providence Park in Novi for $51.32 million or $252.81 per square foot.  There have been other institutional investors chasing quality medical buildings in the area showing the strength of the industry, even here in Southeast Michigan where real estate values have suffered over the past few years.

Major health systems have also announced expansion as the Detroit Medical Center has a total of $237.4 million in various renovation and expansion projects planned. Henry Ford Health System is planning on further expanding its West Bloomfield campus that will add new state of the art operating rooms.  Other systems are looking at creating satellite facilities to help drive patients to their hospitals.

While all may not be happy with the new legislation, it will without a doubt provide more opportunities and jobs in the healthcare, construction and real estate sectors in the near future.  We hope you have a happy and safe Fourth of July!!!

Matthew B. Fenster, CCIM, MCR