Medical and health care led the job creation sector in 2012, a trend likely to continue into the upcoming year.  Increase in medical office development is predicated upon several factors including the emergence of the Affordable Care Act requiring mandatory coverage and new patients, long term demographic trends including the aging of the baby boom generation and increased population growth, the Patient Protection and Affordable Care Act requiring hospitals to implement many new and costly systems, patient clinics and emergency care facilities which are not owned or operated by hospitals.

As a result, the medical office building market is likely to continue to accelerate due in large measure to the transition of common medical procedures to outpatients and with the upcoming implementation of the Patient Protection and Affordable Care Act fundamentally changing the nation’s health care delivery system.

The developers of medical office buildings are expected to design and develop much more sophisticated facilities as medical facilities and hospitals increasingly move higher-acuity care, such as post-surgical recovery and other procedures, off hospital grounds.  Of course previously, emergency departments have been mostly operated by hospitals, but such providers have recently undertaken to partner with private interests to develop dedicated emergency centers.  Additionally, for profit companies are developing and building free standing emergency departments which are targeted at high end traffic, often in retail oriented sites.  Another trend is that health systems, physicians groups and hospitals are willing to consider a partnership with third party companies which specialize in a broad spectrum of other health care related facilities.  An example is M. V. Anderson which is partnering with local providers on cancer treatments, thereby expanding its presence across the nation.  The expansion of “branded” facilities will almost certainly have a real estate component commensurate with expansion.

As the new development of medical office building accelerates, it is likely that other types of buildings such as retail, industrial and office will be adapted for the purpose of medical use.  Many retail chains may downsize creating the opportunities to renovate these buildings into medical facilities.

Property and Portfolio Research a CoStar company reported that 7% of the total office construction in the top 54 markets was medical office building (MOB) and is slightly down from 11.5% in fourth quarter of 2011. Historically, the 10 year average is 11.3%. In the short term, this trend is expected to change as the Affordable Care Act gets implemented. From 2007-2012, 17.7% of total office deliveries was MOB’s.

Overall, the continued growth in health care employment and the anticipated increase in demand for the medical services from an aging population and as a result of the Affordable Care Act the development of medical facilities including medical office buildings, urgent care clinics, surgery centers is expected to increase for the foreseeable future.