Thursday, June 18, 2009

Santa Barbara's Medical Office Market Could Expand

A report published by Marcus and Millichap forecasts the need for an additional 10 million square feet of medical office space, nationally, over the next few years.

The report sites the potential increase in the number of insured people that could be created if the Obama administration is successful in health care reform. Currently, baby boomers account for about 1/3 of doctor's visits but make up about 29% of all people uninsured. If the number of insured rises to the 90% to 95% levels that the government wants then we could see the number of physicians needing to grow by over 5,000 across the country.

Santa Barbara doesn't have a large number of baby boomers without insurance but we do have a large population of uninsured people across all age groups in the lower economic classes. That would mean additional medical offices throughout the area and an increase in the services that Cottage and others are able to offer.

Medical office space is already extremely tight in the South Coast. We are under 1% vacant for medical office throughout Santa Barbara and Goleta and the only new spaces coming on line are from Cottage's expansion efforts. Those will be directly tied to the hospital or for physicians associated with the hospital. There is definitely a market for private development of additional space locally. The question is will there be enough potential returns to attract the developers.

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