Midwest Real Estate News October : Page 1

midwest R E A L OCTOBER 2012 Annual Supplement inside E S T A T E N E W S ® p.35 THE DAKOTAS | ILLINOIS | INDIANA | IOWA | KANSAS | KENTUCKY | MICHIGAN | MINNESOTA | MISSOURI | NEBRASKA | OHIO | TENNESSEE | WISCONSIN WWW.REJOURNALS.COM VOLUME 28, ISSUE 5 PAGE 65 DIRECTORIES: Asset/Property Management Firms • Construction Companies • Auction Companies • Business & Industrial Parks Changing face of healthcare real estate: Hospitals turn to off-campus sites to provide better service By Dan Rafter, Editor T he Patient Protection and Affordable Care Act, better known as Obamacare, has generated the headlines. But Keith Konkoli, senior vice president of leasing in the Indianapolis office of Duke Realty Corporation, said that healthcare providers have been changing the way they serve their patients for years, long before the Supreme Court gave its stamp of approval to federal healthcare reform legislation. The biggest change, and the one that has had the most impact on developers working in the commercial healthcare industry? The rise of off-campus medical facilities. Hospitals across the country, and the Midwest, have been opening free-standing emergency departments, cancer-treatment centers, medical office buildings and ambulatory care centers, all located off their main medical campuses. This is a trend that has allowed these medical providers to move their services closer to a larger number of their pa-tients. And it’s also created new business for developers across the Midwest. “We are definitely seeing an increase in activity this year versus what we saw a year to 18 months ago,” Konkoli said. “Many people believe that regardless of what the Supreme Court decision on healthcare reform was, the face of health-care was already changing. The focus has been placed more on the patient. The whole concept of collaborative care has become important. It has necessitated a rethinking of how healthcare providers are providing their services. The Supreme Court decision did have some effect, but people were already kind of there before it came down.” Michael Berne, senior managing director for Lee & Asso-ciates’ Senior Housing and Healthcare Group, agreed that healthcare providers are more active today when it comes to both ground-up building and renovations to existing facil-ities. It’s made life busier – a positive thing – for developers across the Midwest, Berne said. “We are seeing a very noticeable increase in healthcare activity,” Berne said. “We are not at the levels of 2006 yet, but compared to the last year or two, we are seeing a substan-tial increase in development in this sector.” Reaching out to patients It’s true that people need to see doctors whether they’re in the middle of good economic times or bad. But it’s equally true that they don’t have to spend money on elective sur-geries during down times. And it’s this discretionary healthcare spending that has di-minished during the recession and its slow recovery. This slowdown in elective procedures has caused many medical providers to change long-established habits, said two leaders with Irgens, a real estate firm with Midwest of-fices in Milwaukee and Chicago. As an example, today medical providers, as Konkoli with LOOSENING THE TAP Commercial financing a bit easier to come by today By Dan Rafter, Editor btaining financing for new office buildings, apartment complexes and industrial facilities is still a challenging task. But officials with two major banks recently spoke with Midwest Real Estate News about the changes now taking place in com-mercial lending. The good news for developers? While it’s not easy to obtain financing today, it is possible. Lenders today are passing out their dollars more fre-quently … for the right projects. O > FEATURE (continued on page 16) > FINANCE (continued on page 12)

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