Commercial Real Estate News Brief: March 2017

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In the latest edition of our monthly news brief, JLL’s regional team curates the top commercial real estate industry articles to keep you in-the-know. In this month’s edition, JLL spotlights healthcare real estate, future-proof office solutions and solar electricity benefits.

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Healthcare Real Estate Professionals Prepare for a Wave of Adjustments

The healthcare industry continues to evolve, which means real estate strategies for hospitals, practitioners and other medical offices do, too. Becker’s Hospital Review highlighted the six trends that will impact healthcare real estate this year:

  1. The repeal of the Affordable Care Act (ACA)
  2. Value-based reimbursement and changes to healthcare delivery setting
  3. Tax exempt hospitals coming under pressure
  4. Health systems monetizing real estate assets
  5. New rules impacting leasing arrangements
  6. Continuation of regulatory scrutiny

The potential repeal of the ACA would cause a drop in overall hospital revenue, as the number of insured patients goes down. And, with value-based reimbursement on the rise, some providers may turn to payment-neutral site solutions or consider the construction of off-campus micro hospitals within the community instead of expansions to their current facilities.

Offices Work to Adapt to New Future-Proof Solutions

As data and tech advancements continue to produce new ways of working and productivity, workplaces will have to adapt by aligning their real estate solutions. Today’s businesses will succeed by implementing the following organizational changes in their workplace:

  • Putting data science into the driver’s seat. Proper analysis of workplace data and operational efficiency will help accurately define real estate needs.
  • Embed technology into workplace strategy. The use of smartphones, cloud technology for remote work and edgy tech solutions like virtual reality (VR) will enhance experiences for employees.
  • Create an experience-led workplace. Offices that offer flexibility and amenities to employees will boost retention and recruitment. Many workplaces offer flexible work options, gym memberships, recreational spaces and more.
  • Review facilities. Workplaces must break down silos and, in turn, real estate portfolios must take into account strategic location options to help bring departments together.
  • Take health and wellness seriously. For better productivity, wellbeing and sustainability, workplaces should consider improving indoor air quality, natural lighting and active workspaces.

Implementing Sustainable Solar Solutions Benefits Real Estate Developers

Green solutions—like solar panel solutions in place of traditional electricity options—continue to gain popularity among tenants. But, because developers and landlords typically give the responsibility of the electric bill to tenants, there has been little incentive for them to actually install solar technology.

Today’s pool of tenants now look for buildings with green technologies as a major selling point. To profit off of solar technology, many developers are instilling a surcharge for solar installation in the hopes of creating a value for tenants.

Other solutions include implementing a modified gross lease or full-service lease in which landlords set rates at normal market value, but take on the responsibility of all utilities. The cost of solar technology has gone down from $100 per watt to $1 per watt; experts anticipate solar electricity will eventually be priced below the cost of utility-supplied power. If landlords were to foot the bill for utilities, including electric, they could come away making more on the tenant relationship than their rivals.

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