(ENCINO, CA) -- There is an unprecedented boom in new medical office space around the corner in almost every U.S. community, if President Barack Obama's new healthcare insurance program is enacted this year.
Ten million square feet of new space would be needed, estimates a special report prepared by Encino, CA-based Marcus & Millichap Real Estate Investment Services.
It's the first time any major national brokerage has predicted how much new real estate might be needed in the fast-growing medical office industry.
The report was coordinated by John Chang, National Research Manager and Tom Hershey, Research Services.
Here is how they arrived at their 10-million-square-feet estimate:
"The medical office sector's resilience can be attributed to a combination of variables, including technological advances and medical innovations that continue to extend life spans, as well as the aging baby boomer generation.
"At present, baby boomers account for 29 percent of the total uninsured yet represent almost one-third of all physician office visits.
"Proposed changes to the healthcare system will dramatically increase demand for medical services among this group.
" Per person office visits for 45- to 64-year-olds have expanded by 7 percent over the past decade. Insuring 95 percent of this cohort could elevate physician office visits by 12 percent, or 34 million visits, annually.
"At the current average of 120 visits per week for primary care physicians, approximately 5,400 new general practitioners will be needed to handle the additional workload from this age group alone.
"The resulting demand for office space from these doctors would total nearly 10 million square feet."
The report notes that despite the recession, medical office properties 'have performed favorably, and demand is set to accelerate as medical reform is phased in over the next several years.
"Unlike other asset types, medical office properties continue to garner investors' demand by exhibiting considerable resistance to the economic downturn."
Medical office vacancy is currently 11.6 percent, up only 100 basis points from one year ago. traditional office vacancy, by comparison, is 15.2 percent, a 240 basis point increase over the same period.
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