As of late 2015, pending hospital construction in California is valued at around $12 billion. Two hospital projects at the Lucile Packard Children’s Hospital in Palo Alto and the Loma Linda University Medical Center are each valued at over $1 billion. Although hospital construction in California is notoriously expensive due to seismic regulations, many commercial real estate analysts say that the construction projects are part of a larger hospital construction boom that is going on all over the country.
There has been an increase in hospital construction in the U.S. over the past several years. The hospital construction boom is due in part to an aging population and funding that has come from the Affordable Care Act. According to a health care real estate research firm, hospital construction projects that are currently underway are valued at $97 billion.
Among the 1,340 hospital projects that are being built or planned, there are 150 new or replacement hospitals. In California, the safety standards that hospitals must meet often create renovation problems. When it is too difficult and expensive to renovate a hospital, it is usually torn down and rebuilt. Some hospital construction projects, including the Veterans Affairs Hospital in Denver and the Long Island College Hospital in New York, have become more expensive because of cost overruns.
A commercial real estate investor who is thinking about investing in a hospital construction project may want to consult an attorney. As hospital projects can be more expensive and complex than other kinds of commercial real estate investments, it may be valuable to have representation from an attorney during every step of the process.