Recession's Impact on Medical Office Space

" saw General Growth Properties big mall owner filed for chapter eleven bankruptcy protection today. The commercial real estate market is in turmoil to say the least. But demand for one kind of office space has remained strong after all this medical office space but will that continue. Marcus and village out just put out a report on this very topic and we're joined to discuss that by senior VP and managing director -- who is now. In San Francisco -- Alan welcome to fox business. I'm not a bad time to build a hospital or medical offices. Brian thank you -- pleasure to be here now it's not a bad time at all although. Not not unlike other elements of the economy of the medical office construction trade has to slow down as well at this moment in time there is some level of demand pull back. The long term trends are outstanding. But right now certainly there are some level of short term pullback although very different from general office yeah I mean listen we spent according to report two trillion. All in on healthcare and medical across this country how much is that this flow into real estate. "

" Well that's. Is that say is leading indicator most definitely a real estate if you look at the demand characteristics. For medical office they're very different than the demand characteristics for general office whereas. General office is suffering. Largely due to demand pull back everybody is very familiar with the amount of job losses that are occurring in the country. At the present time but on the medical office side health care is really the loan. Sector. It is continuing to experience job gains albeit a little bit slower in 2009 and we've seen averaging over the past over the past few years but. When you look at the the fundamental demographic. Pushing demand for medical services that is to say the aging population more specifically. The population. Of 55. Years and older residents will grow by over 20%. By the time we reach 133. You see that the demand side of the equation for medical office continues to be very robust consequently the fundamentals are far superior than really any other sector."

" And it would cost some look at that your report. Because of these costs are staggering. According you guys. It cost an estimated one million dollars per bed I mean not obviously for the bad idea what you mean one million dollars per bed to build a hospital. Is that like including of the MRI and cat scan machines there was not just the construction. Well that that's really the overall construction cost what it would take. From start to finish to create a new hospital today the cost exceeds that million dollars that is an incredible somehow. Well it sure is and it just it just speaks to the cost. Of construction today the cost of all the components coming together and consequently. It also speaks to the changes in services now fortunately technology and improved. Health care practices. Are reducing. The need for hospital beds. This is why we see the growth and outpatient services and consequently again they demand driver. For medical office space outside of the hospital itself. All right down conscious of markets and -- happen by interesting stuff is that the report publicly available talent. That is Brian insurance plan under website article yep pretty interesting stuff million of that Allan thank you so much."