By TAMARA KHAN
With Millennials being the largest living generation of 74 million (based on U.S. Bureau of Statistics projections from 2016 Census), Orlando is becoming and is establishing itself as a startup and corporate destination. It is evident in Orlando's median age being 36.5 years old. This is in part due to Florida's steady sunshine, but also the low state and local taxes. The Orlando metropolitan statistical area (MSA) is comprised of Osceola, Orange, Seminole and Lake counties - one of the largest in Florida with a population of more than 2.3 million. It is expected to grow 1.8 percent annually for the next five years. Furthermore, the non-imposition of personal income tax is quite attractive for employers to recruit and retain skilled labor in the region.
Orlando recognized 75 million tourists in 2018, for which the $2.1 billion dollar expansion at Orlando International Airport is necessary. Aside from being a vacation hot spot, the city is becoming a medical destination due to its research and facilities. Adjacent to UCF are Lake Nona Medical City, Central Florida Research Park, and the Quadrangle Office Park. The latter of which is recognized as one of the top research parks in the world. Notably, Lake Nona Medical City is a 650-acre health and life sciences hub where medical care, research, and education are the primary emphases of businesses located there. University of Central Florida offers top-ranked programs for engineering and computer sciences. In addition, the Technology Incubator provides the tools, training, and infrastructure that help facilitate smarter, faster, startup growth.
Over the past 10 years, Florida has created nearly 150,000 jobs in the education and health service employment sector. This is indicative of the need for services to the growing population as evidenced by the number of practicing physicians per capita - 260/100,000 people, just below the national average of 271.6, ranking Florida #24. Combined, the two major hospitals in Orlando employ about 50,000 people and continue to be a destination for world-class healthcare. In addition to several current downtown projects, Orlando Health will be prominent in Winter Park by occupying 20,000sf of medical office space - becoming highly accessible to its surrounding community. Two freestanding ER's (Waterford Lakes and Oviedo), and the commencement of 3 others, are among the projects in AdventHealth's pipeline. The short-term and long-term expansionary construction plans are strong for both hospitals.
Florida's warm climate, attractive assisted living facilities, and amenitized senior luxury communities, are among the top reasons many Baby Boomers, choose the Sunshine State. National Health Expenditures accounted for 17.9 percent of GDP ($3.5 trillion or $10,739 per person), of which, Medicare spending contributed $705.9 billion to the total. Health care spending is projected to rise by 4.8 percent in 2019 and is expected to grow at an average 5.5 percent per year through 2027 - as stated by actuaries at the Centers for Medicare and Medicaid Services.
The effects of demand for primary care and elective services in relation to population growth are highly correlated. As such, medical offices are willing and able to pay higher rents, increasing the value on the properties, and making them not only attractive, but necessary investments. As people are consistently on the quest for youth preservation, more and more physicians offer (or are co-located with) synergistic services like medical spas. Med-spas can be found in luxury shopping centers and professional office parks alike and offer a range of services from Botox and non-surgical procedures, to dermatological rejuvenation.
After several years of practicing, many physicians are realizing the benefits of owning their own practices. Albeit, running a business can be challenging in and of itself, they are recognizing less time constraints and operational decision-making freedoms to adapt as they see fit - compared to work-life in hospitals alone. Aside from the medical expertise, understanding their community and patients allow for more personalized health care, which is essential to any business.
Summarizing, not only are medical offices and surgery centers well valued, but they often are under long term leases (compared to retail). They tend to renew and are one of the few asset classes that is (nearly) recession proof, as confirmed by the Bureau of Labor Statistics study on Healthcare Jobs and The Great Recession.
Tamara Khan is an investment and owner's representative at Lamm & Company Partners, working as a land development and site consultant.
Specializing in "Build-To-Suits", she assists in taking projects from due diligence and investment analysis, to program design and permitting. Alongside her Senior, she collaborates to manage design and budgetary constraints, while maintaining investor required return, and achieving specific client needs. She holds a masters from Dr. Phillips School of Real Estate at the University of Central Florida. She can be contacted at mailto:firstname.lastname@example.org