Ambulatory healthcare–a sector defined as including primary care doctors, dentists, outpatient care specialists and healthcare practitioners–has been a key employment driver in Northern Virginia for decades and that growth is expected to continue, according to a new research note from JLL. It reports that ambulatory healthcare services employment has grown 77% since 2005 versus overall employment growth in overall NoVA of 15% fueled by demand for value-based care and consumer-centric outpatient services.

This growth is concentrated in Fairfax County, which accounts for 46% of the jobs and 52% of the total healthcare real estate inventory, totaling 8.5 million square feet of medical office buildings. Within Fairfax County, the densest cluster of healthcare employees is concentrated in Merrifield, including 14 non-owner-occupied medical office buildings totaling 879,000 square feet, JLL says. Loudoun County posts the second densest concentration of such product with 24 medical office buildings totaling 3.1 million square feet with the Route 7 Corridor comprising 1.4 million square feet of the existing medical office inventory, the highest out of any NoVA submarket.

What Comes Next?

Northern Virginia is in a state of flux due to demographic trends, renewed defense spending, tech diversification and new entrants to the market and these factors are expected to influence the future shape of ambulatory care in the region, JLL notes. For example it writes that:

Major announcements in Arlington County and Alexandria in recent weeks will drive population growth that approaches 10% over the next five years, mainly driven by a millennial and post-millennial population that works across the e-commerce, tech, contracting and cyber fields. Significant rent growth projected across the office and multifamily markets there at the end of this cycle and into next cycle though, will likely push government jobs out of the market.

There is also expected to be growth in population and jobs beyond regional averages outside the Beltway on the Toll Road and throughout Loudoun County, driven by the robust expansion of the cloud and government sales tech sector there. The majority of that growth will be families, which will fuel demand for dentists, internists, family physicians, pediatricians and optometrists, JLL says.

Suburban Office Parks Offer Opportunities

For these reasons, JLL recommends that ambulatory healthcare providers looking for both nearby population growth clusters and discounted real estate opportunities consider suburban office parks. It says that:

With NoVA suburban office park vacancy approaching 25% (10x the level of 2000), rents at the same levels as rents 18 years ago and capital $ p.s.f. values 60% lower than 2000, acquisition, lease and conversion opportunities are wide.