By Melissa Parziale
As the ever changing world of health care continues to evolve, all eyes and attention are being directed toward the impact that this evolution has had on the state of Health Care Real Estate in Central Florida. It's no secret that there has been an undeniable "boom" throughout the Central Florida area when it comes to medical real estate. It only takes a leisurely drive through some of Central Florida's most medically "up and coming areas" to see the continued impact that the peaking commercial real estate market has had in the health care real estate world.
Anne Spencer of Cushman & Wakefield of Florida Inc. provided her own thoughts on the state of health care real estate as it stands today stating the following: "The commercial real estate market is reaching its peak, in particular healthcare real estate. Vacancy is declining and rental rates are increasing. For physicians who own their medical office building, it's a great time to pull equity out by engaging in a sale-leaseback, as investors are hungry for prime medical office buildings. Central Florida is a favorite of medical office investors, who are paying top dollar. We expect this trend to continue for the next 12-18 months, before the real estate market starts its downward cycle."
One of the obvious points to consider is that the Central Florida hospital system is continuing to display and impressive upward growth trend when it comes to medical commercial real estate, expanding their territories to meet the needs of the growing and diverse communities in Central Florida. The activity surrounding the continued construction that support this hospital growth has continued to pick up speed in 2016. According to a medical office report distributed by Cushman & Wakefield of Florida Inc., the hospital markets that are displaying the most construction activity this year consists of Orlando Health, Adventist Health, and HCA. Likewise, it's key to note that Urgent Care Centers are also on the rise. There are now over 60 Urgent Care Centers in the greater Orlando area such as Guidewell, ER Clinix, Care Spot, and Centra Care to name just a few.
The growing strength in the Orlando health care real estate market is undeniable and the effects of that progress has stirred the attention of some major national companies. One of those national companies is Carr Healthcare Realty who has recently established a strong presence in Orlando. Mike Russo from Orlando Carr Healthcare Realty shared the reason they chose the Orlando market: "We chose the Orlando market due to its strong demographics and continued desirability of healthcare professionals looking to grow and open new offices. The combination of climate and lifestyle, strong economy and numerous amenities makes Orlando a prime market for practices looking to thrive."
Over the last five years, the medical real estate community has also seen a steady decrease in the vacancy rate for medical office space. That vacancy rate has fallen to well under 10 percent since 2011 and has been contributed to a steady decline in rental rates. This vacancy rate has made it increasingly difficult to find medical office space availability for rent. It has been particularly difficult for those independent providers who are not connected to the hospital circuit to find medical office space in prime and appropriately populated locations with reasonable rental rates. The lack of inventory has also created challenges and obstacles in the way of investment activity. A lack of inventory invites a lack of investment which, in turn, has slowed the economic growth possibilities within the industry.
Another contributor to the growth in medical real estate is Medical Villages. Medical Villages has developed fourteen medical office buildings over the last four years and their reach has included expansion to many communities across Central Florida. The Medical Villages projects have helped to open the vacancy rate and create exciting leasing opportunities for those providers who prefer to work independently from the hospital circuit and operate their own private practices. Medical Villages has also become home to a variety of national companies as well as some locally expanding specialty practices. Bobby Bridges, the Vice President of Sales and Marketing for Medical Villages explains how Medical Villages has approached the market health care needs of Central Florida: "The market in Central Florida remains very strong and the lack of inventory has created more need for Medical Office Buildings. At Medical Villages we continue to keep up with that need and will be launching our next project in Winter Garden starting the summer of 2017."
As hospitals continue to expand their presence throughout the diverse communities in Central Florida while independent physicians and practices simultaneously begin to discover more opportunities for placement and growth, there is no doubt that, as 2016 comes to a close, we have more to look forward to on the 2017 horizon. Orlando has come a long way as far as commercial real estate is concerned and the medical side of this exciting business has proudly played a major role in that success.
Melissa Parziale is the Human Resources Director for Orange Ave Medical Group and the Executive Assistant to the Medical Villages partnership. She can be reached at mparziale@oacmg.com
