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The Changing Real Estate Footprint in Healthcare

Nov 2022

Commercial real estate in the healthcare sector continues to extend beyond traditional venues such as downtown medical office buildings and hospital campuses. In fact, many healthcare providers are constructing or renovating free-standing buildings in residential — or even rural — areas. Shopping centers have also become in-demand locations, as many healthcare providers are branching out into retail spaces. Today, about 20 percent of leased medical space is in retail buildings, up from about 16 percent in 2010, according to data from the research firm CoStar Group. A key driver of this trend is pandemic-induced changes to where and how we as a population live and work. People have relocated to less urban areas, they’re working from home, and don’t want to commute to see their healthcare providers.

How patients and healthcare providers interact has also changed, with the accelerated adoption of telehealth and the rise of outpatient clinics. Matthew Aguilar, Executive Director of IT at UC Davis Health, says that extending services beyond their current geographic footprint is a key focus for his organization. As a result, they are investing in real estate across a broader range of locales to satisfy the evolving needs of the markets. “Our 142-acre camp consists of 136 buildings coming to around 3 million square feet. By 2030, we expect to reach 7 million gross square feet, and we’ll probably be close to 200 buildings”, says Matt. “We’re also looking at retrofitting existing lease portfolios and turning them into clinics. There’s a lot of growth going in, both in forms of capital investment in new buildings themselves, as well as in retrofitting those buildings.”

Landlords and Investors are Welcoming Healthcare’s Expansion

In the past, many landlords were not open to healthcare tenants, citing concerns such as having sick people around their properties. Things are changing fast, however, with more landlords actively seeking out healthcare providers to fill vacancies and generate more foot traffic that can benefit other occupants, such as retailers. Given the rapid growth of healthcare providers rebranding themselves as wellness companies, there’s also a growing tendency to adopt a similar experience to consumer-oriented retailers.

Commercial real estate is in especially high demand in locations that are visible to passersby, which also makes shopping centers and strip malls ideal locations compared to having medical offices in office buildings. Today’s healthcare providers want to be seen by current and prospective patients.

Key Considerations for CRE Leaders

As healthcare becomes more digitized, technology has come to play a key role in the delivery of better patient outcomes. This means that network infrastructure, such as telecommunication closets and cabling, must be able to accommodate the bandwidth, latency, and dependability requirements not just in the next few years, but over the coming decades. Network and data requirements for healthcare providers are only going to grow as they become more dependent on technology, which means that commercial real estate developers and owners must think long-term.

Small, local commercial real estate venues, which traditionally catered to tenants with minimal networking requirements, are increasingly finding themselves in the spotlight for the healthcare sector. While most already have some form of network infrastructure in place, it’s often insufficient for suitable for the healthcare sector, which requires excellent reliability, scalability, and interconnectivity. In order to deliver the same level of service as that of traditional hospital campuses and industrial and business parks, venues must be retrofitted to accommodate an increasingly digitized future.

Security is another vital consideration. Critical Insight’s H1 2022 Healthcare Data Breach Report, which analyzes ​​breach data reported to the United States Department of Health and Human Services by healthcare organizations, revealed that attackers have moved from large hospital systems and to smaller hospitals and specialty clinics that lack the same level of security preparedness, staff size, or budget. While hacks associated with network servers declined from a peak of 67% in the first half of 2021 to 57% in the first half of 2022, EMR-related breaches soared from zero in the first half of 2020 to nearly 8% of all breaches in the first half of 2022.


UC Davis Health depends heavily on encryption to ensure that attackers are unable to access healthcare data at rest or in transit. “While we’re heavily focused on security layers like encryption, we also understand that security must start at the infrastructure level, “says Matt. “Things like telecommunications closets must be physically secure, with strict access controls. Furthermore, all endpoints must be secured to prevent access to potentially malicious users who may intend to exploit our infrastructure to gain access to connected medical devices.”

How Panduit Helps

From structured cabling solutions to connect IoT devices to IP networks, to comprehensive enterprise network solutions to connect people, information and technology, having the right network infrastructure makes it much easier for CRE leaders to meet the needs of healthcare providers and patients. Whether you are developing new space or renovating an existing one, Panduit can provide insights, solutions and the network infrastructure required to help you succeed.

Download our solution guide, Network Infrastructure for Commercial Real Estate, to learn more about robust, reliable solutions for commercial real estate environments. 


Monte Turnage