Effects of COVID-19 on Long-Term Healthcare Real Estate Sector
Post-COVID Healthcare Real Estate: A Shift Towards Community-Centric Facilities and PropTech
The landscape of healthcare real estate is undergoing a significant transformation in the wake of the COVID-19 pandemic. This transformation is characterized by an increased demand for healthcare services, a stronger emphasis on standalone and community-centric healthcare facilities, and the growing integration of PropTech to improve efficiency and adaptability.
Increased Demand and Improved Fundamentals
Healthcare real estate, particularly skilled nursing and assisted living facilities, is seeing improving occupancies and stronger reimbursement rates post-pandemic. This positive trend validates a rebound in capital flow and financing activity, such as through HUD programs focused on healthcare properties.
Standalone Facilities and Community-Centric Approaches
The pandemic has accelerated shifts toward standalone ambulatory care centers and outpatient facilities, which are more community-focused to improve accessibility and patient experience. These facilities are designed to reduce hospital burdens and infection risks, making them a preferred choice for many.
PropTech Integration
PropTech solutions are increasingly being leveraged in commercial real estate, including healthcare facilities, for predictive analytics, asset management, and to decide on conversion or redevelopment of underutilized properties. This integration enhances operational efficiencies and cost control, making healthcare real estate more adaptable and responsive to changing needs.
Focus on Cost and Operational Controls
Post-COVID, healthcare property operators have better control over operational expenses, such as labor costs. In a tightening financial environment, this economic discipline informs facility design and management strategies, emphasizing value and efficiency.
The Principles of the '15-Minute Neighborhood'
The principles of the '15-minute neighborhood' have become central to the masterplanning of large-scale new communities and the function of existing communities. This approach emphasizes the importance of local amenities and services, making healthcare facilities more accessible and integrated into daily life.
Pandemic Preparedness
Pandemic preparedness is vital in reducing the impact of the inevitable next pandemic. Flexible facility design is all-important, allowing for rapid adaptation to new healthcare delivery models and disease outbreaks.
Growth in Ambulatory Care
The continued growth in ambulatory care will be key to providing faster surge capacity with fewer disruptions than temporary hospitals. This trend towards decentralized healthcare delivery is expected to continue, with a focus on standalone, community-centric facilities.
Case Study: Carter Jonas and Community Diagnostic Centres
In June 2023, Carter Jonas achieved planning consent for a new Community Diagnostic Centre in Barking, Havering and Redbridge University Hospitals NHS Trust. This standalone facility is a testament to the growing trend towards community-centric healthcare real estate.
Public Opinion and Priorities
A 2022 poll by Policy Exchange found that 81% of respondents put new, modern healthcare building in the top three priorities required of Government infrastructure. This public demand for improved healthcare facilities underscores the importance of investing in healthcare real estate that is adaptable, efficient, and community-focused.
Global Perspectives
Countries like China and India are planning to add thousands of new hospital beds to their healthcare infrastructure. The continued growth in ambulatory care will be a crucial part of this expansion, providing faster, more accessible healthcare services to a growing population.
In conclusion, the post-pandemic landscape of healthcare real estate is characterized by increased demand, a stronger emphasis on standalone and community-centric facilities, and the growing integration of PropTech to improve efficiency and adaptability. This shift reflects a recognition of the need for more flexible, responsive, and accessible healthcare services in the face of ongoing public health challenges.
- In light of the growing demand for healthcare services and improved fundamentals in the post-pandemic landscape, investments in healthcare real estate, such as HUD programs, are becoming increasingly attractive for financing activities.
- To mitigate infection risks and improve accessibility, there's a transition towards standalone ambulatory care centers and outpatient facilities, which are designed with a community-centric approach and aligned with the principles of the '15-minute neighborhood'.
- In response to the changing needs of healthcare real estate, PropTech solutions are being utilized to optimize asset management, make decisions about property conversion or redevelopment, and enhance operational efficiencies, thereby ensuring cost control and adaptability.
