Market Focus: Bucking the recession

HEALTHCARE HELPS KEEP SAN ANTONIO HUMMING

By John Mugford

This is what University Hospital in the South Texas Medical Center would
look like after an expansion and renovation costing more than $770 million.
Rendering courtesy of University Health System

What recession? Sure, there are signs that the weak economy is affecting San Antonio, as most business people in SA-Town will tell you.

For example, the construction of speculative general office buildings has slowed considerably, and probably will continue to be slow until demand catches up with supply, according to local commercial real estate brokers and developers.

But when it comes to the healthcare industry, and subsequently healthcare real estate, business is chugging along rather nicely, thank you.

In fact, according to a report in late 2008 from the local office of Grubb & Ellis Co. (NYSE: GBE), the amount of medical office space coming on line in 2009 was projected at about 690,000 square feet, more than the new supply of general office space – projected at about 570,000 square feet.

“Medical, I think is definitely one of San Antonio’s strongest sectors, along with the military, and while it has seen a slowdown, it’s doing very well,” says Paul Barker, a partner with San Antonio-based Endura Advisory Group. “There’s such a strong medical presence in town and so many strong systems that it breeds a strong market. And residential, while it has slowed, is still strong and there are homes being built. The thing is, San Antonio is still a great place to be long-term; job growth looks very good over the long haul.”

Bill Ozer, a VP with San Antonio-based NAI REOC Partners, adds that the town’s large Hispanic population, including many folks from Mexico with second homes in the Alamo City, bolster the healthcare industry.