Now that the sweeping overall of the nation’s healthcare system has passed in a narrow Sunday vote in the House of Representatives, its impact on the commercial real estate markets in the U.S. is coming into sharper focus.

 

At least one industry watcher sees the potential development of more than 60 million sq. ft. of new medical office buildings.

 

Jeffrey H. Cooper is an international investment banker specializing in medical office properties and health-related facilities, and is executive managing director with Savills, a global real estate services firm.

 

He foresees at least four major impacts from the passage of the healthcare reform bill:

 

- 30 million new insureds seeking medical care will expand the need for medical office facilities to serve them.

 

- Based on the standard industry multiplier -- which calculates that each new outpatient requires 1.9 sq. ft. of new medical office space -- 30 million added insured people would ultimately trigger construction of roughly 57 million sq. ft. of new medical facilities. 

- Reduced reimbursement for in-patient treatment will require development of new ambulatory treatment facilities and medical office buildings.

 

- Continued demand for new capital projects will require hospitals to seek third-party financing and ownership with traditional real estate investors for non-core facilities for which tax-exempt bond financing is unavailable.

 

Cooper just may be on to something here. He has more than 30 years of experience in real estate investment banking, investment management and capital markets activities. In the past five years, he has been involved in over $10 billion of real estate transactions and has been responsible for spearheading Savills' healthcare real estate practice.