At the beginning of 2019, New York City began investing in its healthcare infrastructure for NYC Health + Hospitals/Metropolitan. Nearly half of the $52 million in upgrades went toward the emergency power system. That update alone could help support lighting, medical devices, computer systems, IT networks, and more in the event of a natural disaster.
This is a major advancement for the hospital and its patients. Not only is a hospital considered an important piece of a city’s infrastructure, but as seen in this case, the economic health of a city can also impact a health system in return. New York City’s significant investment in healthcare proves that healthcare and community infrastructure are deeply connected.
Types of Infrastructure
Typically, the word “infrastructure” evokes visuals of things like roads and bridges, but it also involves much more. There are three main types of infrastructure. Here is a simple overview of the three:
Soft Infrastructure: These are the elements that help sustain the economy and provide specific services to the community. Examples of soft infrastructure include law enforcement, financial entities, government resources, and healthcare systems.
Hard Infrastructure: Roads, bridges, and transportation systems are examples of hard infrastructure. This type of infrastructure includes the physical elements that allow the city to function.
Critical Infrastructure: The government identifies components that it deems necessary for the community to function, like public health, agriculture, and telecommunications.
The Importance of Infrastructure
Within the last decade, Urban Land Institute (ULI) performed a study concluding that infrastructure plays a significant role in garnering the attention of developers and investors. They surveyed 450 people, including leaders in the public sector and private developers. Both groups noted that infrastructure was one of the top factors when determining the location of their real estate investments. Private and public sectors both included public transit as a priority for determining future investments. And it was important to both the public and private sectors to consider the resources behind long-term operations and maintenance of infrastructure.
The ULI survey is evidence that infrastructure has been and continues to be vital to commercial real estate. Not only is it an important facet of industries like retail, restaurant, office, etc., but infrastructure plays a starring role within the medical office building sector. Patient commutes, patient and employee access, and the level of patient care are all connected to infrastructure. Before investing in, leasing, or purchasing a facility in the MOB sector, it’s important to know how infrastructure can impact that facility and its patients.
Infrastructure and Healthcare
For a medical facility to function and thrive, patients need to have access to the physical building. This means that hard infrastructure, including roads, highways, and public parking areas are necessary for a patient to visit a healthcare facility. In some cases, patients or employees may also require public transit to visit a medical office. These items may seem commonplace for major cities. But in rural areas, these elements are not always available, and if they are, they may not be in prime condition.
In cases where infrastructure needs improvements, companies will sometimes provide the resources for infrastructure developments. And in some cases, individuals may also fund expansion projects for healthcare facilities. These are positive methods for a rural community to receive the medical facilities they need without great cost to the city.
Reciprocating Impacts
Not only is infrastructure important to healthcare, but healthcare helps improve community soft infrastructure. MOBs significantly impact the economies of their cities. In addition to bringing healthcare dollars into the city, they provide much-needed jobs. Medical facilities also sometimes attract and improve other businesses. This is one reason that rural areas especially benefit from medical facilities within their communities.
Infrastructure is an important topic within commercial real estate, and specifically in medical real estate. Community infrastructure can have major effects on medical facilities and vice versa. Before signing a contract, investors and health systems should consider researching the city and how infrastructure could impact their MOB.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
