IBJNews

Owners, developers see silver lining in health care real estate

Back to TopCommentsE-mailPrintBookmark and Share

Health care real estate isn’t immune to the ravages of the recession, but it has survived the nation’s weak economy better than most sectors, and some owners and developers of commercial space think it’s positioned to thrive.

Among them is Healthcare Trust of America, a Phoenix-based real estate investment trust that owns more than 960,000 square feet of health-care-related real estate in the Indianapolis market. The figure represents about 13 percent of HTA’s 7.4-million-square-foot portfolio.

HTA bought the bulk of that portfolio—almost 700,000 square feet— in June 2008 from Long Beach, Calif.-based Health Care Property Investors, one of the country’s largest publicly traded health care real estate investment trusts. About 64 percent of the space is leased to Clarian Health Partners, said Scott D. Peters, HTA’s chairman, president and CEO.

“We like to affiliate with strong providers. Clarian has significant mass and a strong balance sheet. We align with health care systems that dominate or will dominate their market,” Peters said.

HTA isn’t alone in seeing large hospital systems as the key to stability for health care real estate.

Locally based Duke Realty Corp. also is bullish on the health care sector and the facilities needs of large providers. The company told analysts in a conference call last fall that the sector is a bright spot for the company. “We are well positioned to grow this business…we have an excellent team with strong relationships with leading hospital systems,” Duke executives said.

At year-end 2009, Duke’s local portfolio of more than 472,000 square feet of medical office space was 92 percent leased. And its health care division, locally based BremnerDuke Healthcare Real Estate, said it expects to grow its health care portfolio by $1 billion over the next five years.

Even smaller developers are getting in on the act. Last month, the development and construction firm Shiel Sexton confirmed it's working on what could be a $50-million mixed-use development anchored by Clarian Health near 16th Street and Capitol Avenue.

“Occupancies and rent structures are more stable in the medical sector,” said Abbe Hohmann, a senior vice president at the local office of St. Louis-based Colliers Turley Martin Tucker. Some of the demand for space, such as Clarian’s new 31,000-square-foot bariatric surgery center at Intech Park, is technology driven, she said.
As for health care reform, it’s too soon to know how that will affect demand for medical space, Hohmann said.

HTA, the REIT with big holdings here, sees reform as one of the positives. Regardless of what reform ultimately looks like, it should result in more people being insured, said Mark Engstrom, HTA’s executive vice president of acquisitions.

Rather than seeking treatment at a hospital emergency room, those people will have a relationship with a physician and receive treatment in a more conventional setting. That means more demand for medical offices and clinics, Engstrom said.

The trend toward preventive medicine will continue as well, causing health care systems to outsource preventive medicine practices, he said. “We want to be where those new facilities are," he said.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Again, Maria.... how much are YOU contributing? The man doesn't HAVE to give a red cent! What don't you get about that? And, I know this might actually require some actual "facts", but can you please point me to the parking garage that the city gave to him?

  2. Another internet tuff guy I see. And what would the basis of taking the person to jail? If they were drunk, yea. But if not, there would be no jailable offense. All these gestapo, Nazi, jackboots are running SCARED. When the SHTF in this country who's side are you going to be on? The citzens, or the establishment? Better make up your mind quick because it's not far off. I would rather be trying to make friends than enemies. But no worries my "friend", God will take care of you and your likes in good time. It tells us that in the bible. If you stand, support and help carry out the plans of evil rulers, you will NOT be spared the wrath of God. That simple. All you can do is repent now and ask God to forgive you.

  3. Yes, Ersal, thank you for donating a whole $75,000, while the city gives you a parking garage for free and is going to pay for a multi million dollar stadium for you. I'd be donating money too if I was on welfare.

  4. I live and work in Broad Ripple and agree 100% that the traffic is not a significant problem. It can be slow at some times, but hey...this is an urban area. As for the development itself...HOORAY. Office and retail development brings people during the day, something that our community needs much more of. Thank goodness people are finally waking up to take advantage of the serene White River views. The BRVA land us committee endorsed the project because they know how these kind of projects help offset the cries of "too many bars". Pray that this development, and the proposed major investment by Browning, move forward. And remember Good Earth, these will mean hundreds of daytime people - potential shoppers for your store.

  5. Under current, previous existing law, this new law would be unconstitutional. Not that supposedly having to have a driver's license to drive isn't in the first place.

ADVERTISEMENT