Western U.S Market Booming in Healthcare

Even in a period of uncertainty, the West Coast is busy with healthcare activity. That’s according to Jaime Northam, vice president of healthcare development for Ryan Companies.

Northam, who will be a speaker at GlobeSt.’s annual healthcare industry event, from December 2-3 in Scottsdale, and focuses on western regions, describes the current state of the healthcare market as “strong.” A number of things are happening from deal-making to the development of projects.

EVERYTHING IS HAPPENING

“All of the hospitals, all the health systems [on the West Coast], have expansion plans that they’re moving forward with,” Northam said.

She added whether that’s “acquiring land, [or] just growing their footprint.”

Furthermore, there’s no shortage of competition.

“You’ve got a lot of health systems that will go in each other’s backyards, and fight for land,” Northam said.

Most notably, outpatient buildings and hospitals are seeking third parties for help – and Ryan is taking advantage of that trend. Developers have been exploring alternatives since the pandemic, which has caused issues including capital constraints and labor shortages. As a result, they have been open to changing their strategies and leasing properties, which opens opportunities in real estate, according to Northam.

SUN BELT LEADS THE WAY

Right now, Northam said the Sun Belt states are leading the demand from her point of view. A state that’s standing out right now is California due to the 2030 Seismic Act, which requires all hospitals in the market to renovate or replace properties to ensure safety following earthquakes. That’s leading to hefty industry investments.

“They’ve got certain regulations and restrictions happening over there that are fueling healthcare construction and development just by the nature of those restrictions,” Northam said of the activity going on in The Golden State.

“The amount of investment as a result of that is billions and billions of dollars.”

Meanwhile, the downside to that is it’s gotten tougher to find land to develop, she added.

Arizona, Texas, and Colorado are among the other regions that are seeing healthy activity as well, according to Northam.

RYAN IS KEEPING BUSY

Currently, Ryan is focusing on its existing properties and adding to its portfolio. On the acquisition front, Northam said the company will look for “value-add plays.” This includes converting an asset, especially an office to a medical property.

On the development side, Ryan just completed a project called One Scottsdale, a medical outpatient building located in the namesake city that measures 101,136 square feet. Also, its 65,000-square-foot medical building development recently broke the ground in Goodyear, Arizona.

Additionally, Ryan has activity going on in Florida and the Midwest, whether that’s ground-up developments, acute care hospital projects, expansions, renovations, or other considerations, per Northam.

ANOTHER STRONG YEAR COMING

While uncertainties remain about the election, and where interest rates will wind up, Northam thinks 2025 will be “another strong year” for the medical sector.

“I don’t see any letting up of this demand or activity that we’ve seen or interest within the medical office space,” she said.