As a hub of healthcare and technology, Seattle is well-positioned to be an indicator of real estate trends in both industries. In the second installment of our “Trends and Predictions” series, Kinzer Partners broker Shelley Gill comments on consolidation in healthcare and life sciences to achieve strategic outcomes, and the future of “healthy” buildings.
Broker: Shelley Gill, partner
Joined Kinzer Partners: 2005
Main projects and focus areas:
I work, for the most part, with larger local portfolio clients across all types of industries. I’ve worked with a number of mission-based organizations in tech, healthcare, and life sciences. With all my clients, I prioritize relationships and make sure to provide measurable value.
Notable trends of 2018:
Consolidation to achieve strategic outcomes
In healthcare, a trend is continuing that started years ago: bringing services closer to their patient base. We’ve sited several different clinic locations for Seattle Children’s Hospital, all with a focus on making their services more accessible to their patients. This is an industry-wide trend.
In life sciences, we see continued consolidation of administrative and back-office services from an organizational standpoint as entities focus on cost control while maintaining a high level of service.
In research locally, we saw the merger of Seattle Children’s Research Institute with the Center for Infectious Disease Research. These two entities are combining efforts to combat infectious disease on a larger scale.
Seattle’s Polyclinic, a healthcare provider, just announced that they will be combining forces with a UnitedHealth Group subsidiary, OptumHealth. These types of collaborations often result in a need for administrative, back-office space to be consolidated and possibly housed in a single location to take advantage of economies of scale.
Another trend in healthcare and life sciences is increasing cross-specialty collaboration. So, if someone is studying Ebola over here and malaria over there, they’re working to eliminate the silos of focus on these single diseases and encouraging researchers to work together for different applications. That may affect their real estate plans and inform how facilities are designed and planned to encourage cross-collaboration.
Traditional office tenants are seeing this trend as well, where different teams are encouraged to intermingle for more interaction and innovation.
Diverse locations as recruiting strategy
In tech, we’re continuing to see the trend of larger firms establishing locations on both sides of Lake Washington. That didn’t used to happen – they used to differentiate. But Amazon has committed on both sides of the lake, as has Google, and others. In the past it was a big deal to cross the lake, and now it’s part of their recruiting strategy. The future light rail plan will also make it much easier to commute between campuses. Employees’ preference for flexibility in their schedules and workplaces are driving this development. No one wants to sit in traffic. They want to work closer to home or from home.
Predictions for 2019:
A shift toward healthy buildings may drive the real estate selection process
I’d love to see more integration of technology in commercial real estate. Big data analysis and predictive analytics – we could really use more of that in the commercial real estate industry. I think it could better inform site selection.
On a separate note, many design firms, such as the DLR architecture group, are focusing on making healthy buildings and their impact on employee productivity a criteria for location. Thus far, the market seems to be recognizing “human” design elements inconsistently, some developers and tenants more than others. There’s not yet a good system to sell it or market it, where a building owner can charge extra rent. So these groups are working to better quantify a healthier building’s effects on productivity. That could happen in the next year or two.
With lower office rent and housing costs comparatively lower than other technology hubs nationwide, we have experienced an influx of larger tech firms in the Puget Sound area. There remains a significant spread between Puget Sound metrics and those in many competing cities with tech dominance. We expect a continued push into our region, as long as the employee pool and the region’s infrastructure can keep up.