There is more than 50 million sq. ft. of medical office development currently in the construction pipeline throughout the United States. America's aging population continues to drive demand for medical services, and that, in turn, is helping fuel activity in the medical office development pipeline. The industry saw $7 billion in capital investment in medical operations in 2021 and expects to see a big portion of that in 2022, according to Todd Perman, vice chairman of global healthcare services for Newmark. That's driving a demand for space and more buildings.

"Healthcare is one of those high-demand services that you end up with, that even when you go into a recession, you will see people focus on their health," Perman says. "That speaks well for the medical office and the other sectors related to healthcare".

There were 703 medical office building projects under construction to start the year totaling 50.4 million sq. ft., up from 44.2 million sq. ft. 12 months earlier, according to Colliers. Those projects were concentrated in off-campus facilities that tend to be smaller and provide readily accessible locations and outpatient clinics to accommodate the shift away from in-patient hospital care, Janus says. Medical office completions declined in 2021 to 19.5 million sq. ft. after 22.6 million sq. ft. was completed in 2020, according to numbers from Colliers.

Medical offices are being designed to use less space and drive the same care in a more efficient manner, Jacobson says. "You have the staff in the middle and a corridor that looks like an H so staff can cut through areas with exam rooms on the outside," Jacobson says. "They want to reduce the amount of steps taken."

Travis Ives, an executive director with Cushman & Wakefield's who heads its U.S. healthcare capital markets team says "one of the bigger trends to watch is how the pandemic changed where people want to live, whether it's moving out of an urban area to the suburbs or migrating to the Sun Belt and other locales".

"They built a system around where people live and work, and the pandemic created a catalyst that prompted people to relocate within metropolitan areas and to other parts of the country, '' Ives says. "Healthcare isn't known for moving fast, but now it has to play catchup to maintain market share and serve that population. That's a theme talked about for a while in traditional office space with employees moving to the suburbs and not commuting downtown anymore. Now the same theme is going to play out in medical office too. I think you're going to see healthcare providers starting to expand services in the suburbs where they may not have been as aggressive in that growth strategy had it not been for the pandemic and dislocation of the population as a result."

To read more about why there is strong demand for health services that is driving more medical office development, read this article.

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