A greater need for healthcare services is potentially leading to even greater demand for medical facilities.
Population Growth Over the Age of 65
As a nation, the population is growing larger and older at an unprecedented rate. This growth is anticipated to create greater demand for healthcare services and the facilities that house them. By 2050, the US will be home to 91 million more people than in 2010. The population over 65 years of age is expected to grow significantly between 2010 and 2060, from 40 million to more than 92 million people, a 125 percent increase.1,2
“Projections of the Population by Selected Age Groups and Sex for the United States: 2015 to 2060.” U.S. Census Bureau, December 2012
As the population ages, older Americans are likely to manage more chronic medical conditions. This should result in the need for more medical services and greater demand for healthcare facilities.
Sources: “National Ambulatory Medical Care Survey: 2010 Summary Tables.” Centers for Disease Control and Prevention/National Center for Health Statistics. 2012;“National Ambulatory Medical Care Survey: 1996 Summary Tables.” Centers for Disease Control and Prevention/National Center for Healthcare Statistics. 1997.
Rising Healthcare Spending
In 2012, annual national healthcare expenses exceeded $2.8 trillion; by 2022 Americans will spend more than $5 trillion annually on healthcare. In fact, healthcare spending is expected to reach nearly 20 percent of the nation’s GDP by 2022, and on average, per capita spending on healthcare continues to increase.3 This rise in spending is largely driven by those over 55 years of age, a group that is anticipated to expand almost 20 percent by 2013.4 The aging of the country and growing life spans are leading to ever greater demand for healthcare services and healthcare-related real estate.
Source: “National Healthcare Expenditure Projections 2012-2022 Table 1: National Health Expenditures and Selected Economic Indicators, Levels and Annual Percent Change: Calendar Years 2007-2022.” U.S Department for Health and Human Services-Centers for Medicare and Medicaid Services, Office of the Actuary. January 2013.
Projected Job Growth
As spending and demand for healthcare services increases, the sector continues to add jobs. Between 2010 and 2020, the healthcare job sector is projected to grow by more than 29 percent, generating 3.5 million new jobs, more than any other industry.5
Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012-13 Edition, Projections Overview.
Proven Exponential Job Growth
Historically, the healthcare sector has experienced strong job growth. Healthcare now accounts for 10.76 percent of total US employment.6
“Employment, Hours and Earnings from the Current Employment Statistics Survey (National)”. Bureau of Labor Statistics. As of August 31, 2013. Calculations by Griffin-American Healthcare REIT III.
Necessity Based and Recession Resistant
Due to the aging of America, healthcare-related real estate enjoys built-in demand drivers that do not exist in other real estate asset classes. Many view healthcare real estate as more stable and recession resistant than other commercial real estate sectors. Medical office buildings, even through the depths of the Great Recession, enjoyed high occupancy in excess of 90 percent. By comparison, traditional office space occupancy has historically been much lower.7
“National Medical Office Fundamentals”. Marcus & Millichap Research. Q2 2013.
Increased Life Expectancy
Increased physician visits, advances in technology, nutrition and lifestyle are helping to improve longevity. Based on research by the Society of Actuaries, a 65-year-old female has more than a 40 percent probability of living to at least the age of 90, while there is a 1-in-3 chance that one member of a 65-year-old couple will live to at least age 95.8
Source: Society of Actuaries, 2000 US Annuity Table.
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- “The Older Population: 2010”. U.S. Census Bureau, November 2011.
- "Projections of the Population by Selected Age Groups and Sex for the United States: 2015 to 2060." U.S. Census Bureau, December 2012.
- National Healthcare Expenditures Projections 2012-2022.
- “Medical Office Research Report: Medical Office Remains Healthy in Ailing Economy.” Marcus & Millichap. 2009. Page 1.
- “Occupational Outlook Handbook, 2012-13 Edition, Projections Overview”. Bureau of Labor Statistics, U.S. Department of Labor.
- "Employment, Hours and Earnings from the Current Employment Statistics Survey (National)". Bureau of Labor Statistics. As of August 31, 2013. Calculations by Griffin-American Healthcare REIT III.
- "National Medical Office Fundamentals". Marcus & Millichap Research. Q2 2013.
- Society of Actuaries 2000 U.S. Annuity Table.