What stood out in JLL's second quarter report on the outpatient medical building in Manhattan was the recent bullishness of employment. The company forecasts healthcare employment growth to 11% between 2024 and 2029, above the national average of 7.3%.
inference? Matt Coursesen, US healthcare lead for JLL's lease advisory services platform, attributes optimism to both growth in both graduation and population, particularly among older Americans.
“There are plenty of academic medical centers in Manhattan and the three states,” said Coursen.
He also added that Manhattan is experiencing one of the fastest population booms in the country.
“We believe that more and more health services are needed to support the growth of our population and labor pool, as we demonstrate a healthy partnership between providers and patients,” said Coursen.
Another important trend discovered in the second quarter was the rise in rent and lease seeking.
NIH cuts could hit New York hard
But even so, headwinds and uncertainty remain for health care. For one thing, the NIH cut is expected to hit New York State hard. Savills previously estimated that the area is expected to lose about $880 million in funds.
Coursen admitted that it is now difficult to predict the exact impact of a cut, but the impact can be “risqué.”
“I think we can start in the third quarter with some predictions about the impact the healthcare industry has felt on cutting funds for NIH, but we expect it to be very impactful as it is sent directly to research institutes and academic health centers.
“If these organizations do not receive the same amount of funding, the research program could not proceed as before and could be fooled to affect real estate, facilities and how they operate within their assets.”
Medicaid cuts bring another hurdle
Another challenge healthcare needs to overcome is Medicaid reduction, which was recently signed into law in one big beautiful bill law. A June analysis from the Institute for Fiscal Policy found that 70 New York hospitals are at risk of closures due to medical programs eruptions.
“Organisations that have value-based care models and community clinics that rely heavily on Medicaid reimbursements will feel the impact,” explained Coursen.
He added that it could lead to more healthcare properties.
Furthermore, NIH and Medicaid reductions result in reduced patient volume, reduced funding for research and advancement, and potentially less sector development activities.
The healthcare sector is currently digesting the full impact of the OBBBA. Coursesen is considering several things, including the impact of reimbursement rates, how healthcare operators can unlock capital, and whether industry players will invest in and expand in higher margin facilities.
Once healthcare operators have analyzed everything, Coursesen predicts that transaction speeds will enter a slowdown period for the remainder of 2025, with new project plans pending in Manhattan. However, he believes that mergers and acquisition activities will recover.
“I think we'll see a little more,” he added that he believes this will happen with some field systems and other properties that are facing trouble as a result of the funding cuts.
