The growth of the outpatient care market is heating up in certain states, especially in those without certificate-of-need restrictions and with large populations of older Americans, such as the Southeast and Southwest.
As ASC development follows trends in population growth, real estate trends follow, AZ Big Media reported Nov. 7.
“Expanding surgery centers outside of the hospital structure is beneficial for patients but also an economic boost to the communities they care for,” the article reads. “New homes filled with new residents lead to new doctors’ offices, and in turn new investments.”
While the increased demand for ASCs in the region could lead to an economic boom, increasing costs of supplies and labor mean that obstacles still lay ahead for real estate developers looking to break into the ASC space. According to Big AZ Media, contractors report material costs climbing by as much as 80% on essentials like fuel, asphalt and steel. They also report labor expenses rising over 20% in two years, forcing projects to be coordinated further in advance and often delayed due to labor shortages.
The slow pace of construction has actually hindered new healthcare real estate development, according to the report. Perry Gabuzzi, vice president of real estate firm Kidder Mathews, told the publication that redevelopment has also become a popular option for ASC projects, as new construction can frequently take more than two years.
Kevin Smiegiel, vice president of Transwestern Phoenix (Ariz.) healthcare advisory service team, told the publication that “there’s been maybe four medical offices to have truly come out of the ground in the last two years. Most of them are all anchored by a hospital. With construction costs through the roof right now, our first preference is to find something that can be readily repositioned into a medical building.”
