Navigating the Future of Healthcare Real Estate: Trends & Insights

May 24, 2023 | Marcos Miranda

According to a report by JLL, healthcare real estate was the second-fastest-growing commercial real estate sector in 2020, with a total investment volume of $13.6 billion. Marcos Miranda, CCM, cGMP, LEED AP, Vice President & Health, Science & Institutions Director for AFG Group, Inc. shares his insights about the current outlook of the Healthcare Industry. His responses shine light on a number of exciting shifting trends that are impacting both public services and retail healthcare facilities.

Can you describe your outlook for the healthcare industry?

Miranda: I anticipate growth in health and science research facility new construction and modernization, with a focus on upgrading existing facilities that have experienced deferred maintenance over the past decade. Many pharmacy companies (CVS, Walmart, Walgreens, etc.) are also rethinking the use of their current facilities to add these services within their existing footprint.

As a firm, AFG expects a slowdown in new hospital construction and more attention towards the construction of urgent care facilities, which require less upfront cost and can be easily tailored to regions that are currently not served by mainstream hospital facilities.

What are some key obstacles that healthcare providers face when making real estate decisions?

Miranda: The biggest obstacle for healthcare providers as how to finance and service the debt on big capital expenditures of new construction or renovation of their facilities. Currently, there seems to be a big unknown regarding how insurance companies will reimburse providers for services delivered, given the new legislation recently passed and the ongoing political battle surrounding the Affordable Care Act.

Secondly, is the increasing demand for medical services and the lack of doctors or facilities. As a result of COVID-19, the use of telehealth came into play, but providers do not know if the public will continue to use the service, or if insurance companies will continue to pay for telemedicine services when traditional options are available.

What seems to be an on-going concern is the potential for a recession, which directly impacts the revenue that healthcare providers expect to receive. Providers will need to do more with less to maintain their facilities.

What are some current opportunities for healthcare organizations pertaining to their real estate portfolios?

Miranda: With the potential slowdown in the economy, healthcare organizations may have an opportunity to rethink the use of their current facilities and consolidate their operations to make facilities more efficient. The reconsolidation will save operating costs, which organizations can put back into the facilities for deferred maintenance or much-needed renovations. New technologies, including those related to construction, health, and cybersecurity, will also come into play, making portfolios more efficient.

CMAA NCC: What do you see as exciting emerging trends that are shaping the future?

Miranda: Emerging trends include making existing healthcare facilities more efficient and easier to operate and maintain. There has been a big push to recommission existing facilities, which saves energy, maintenance, and capital costs by ensuring building systems are operating at their peak efficiency while lasting their complete life cycle. Another trend I’ve witnessed is the upgrading of existing backup systems within the healthcare portfolio. Many facilities are making sure they have adequate emergency power and backup cooling due to increased weather-related events.

How can the Construction Management Industry help healthcare providers prepare for a rapidly changing real estate environment?

Miranda: Healthcare providers are looking for partners who can offer expertise in healthcare construction and design, with a specific emphasis on energy efficiency, sustainability, and infection control measures. As an industry, Construction Managers are able to help prepare and assist Owners by offering expertise in upgrading existing facilities, consolidating operations to increase efficiency, and implementing emerging technologies. We can also assist in addressing obstacles such as financing, increasing demand, and the use of telehealth. By working closely with healthcare providers, the Construction Management Industry helps ensure that facilities are prepared to meet the evolving needs of patients and the healthcare industry as a whole.

Tell us about a recent Health & Science project you’ve been involved with that encapsulated these trends you’ve mentioned.

Miranda: I’m honored to have been trusted with managing a number of large renovations of critical systems within federally-owned and operated data centers, including for the National Institute of Health (NIH) at the National Library of Medicine in Bethesda, Maryland.

The NLM provides both medical records and research data to the healthcare community in real-time and even during the recent $19.8M renovations that AFG managed, they experienced no downtime. Multiple systems, including backup glycol cooling, new computer room air conditioning (CRAC) unit installation, and backup emergency power were installed while the data centers remained fully operational. Much of the work was accomplished by running temporary piping and parallel systems and to feed existing equipment while the infrastructure was being upgraded.

My team’s management of this infrastructure upgrade resulted in detailed planning and design documentation which followed a specific sequence of operation and allowed for the facilities to continue operations. AFG and NIH leadership on the project were recognized in August 2022 with an NIH Group Award from Mr. Jim Ng, PE, Deputy Director, Division of Design and Construction Management, Office of Research Facilities, NIH.

About the Authors

Marcos Miranda, CCM, LEED AP, cGMP, Marcos Miranda is an accomplished professional with extensive experience in project and program management, facilities management, and environmental sustainability. As the Vice President and Health, Science & Institutions Director for AFG Group, Inc., he oversees a team that provides construction management, engineering, and consulting services for a variety of Federal clients including the National Institutes of Health (NIH) and National Institute of Standards and Technology (NIST). With over 20 years of experience in the industry, Marcos has built a reputation for delivering successful projects that meet the unique needs of his clients. He is well known for his keen approach to managing complex projects, and mentorship and guidance of other professionals looking to succeed in the field of construction management. Marcos is a Certified Construction Manager (CCM), a LEED Accredited Professional (LEED AP), and has expertise in current Good Manufacturing Practices (cGMP).

About AFG Group, Inc.

AFG Group, Inc. is a woman-­owned firm focused on multi-­disciplined program, construction, and relocation management, with a national portfolio of work in healthcare, laboratories, courthouses, educational facilities, and government buildings. With 30 years of business acumen, AFG has earned a reputation for providing strong expertise, responsiveness, and project execution that helps owners navigate through complex design, procurement, construction, and activation processes.