Leveraging Location and Speed to Support Improved Patient Care

Medical office building (MOB) vacancies are down. Construction costs are up. On the surface, it looks like a huge challenge for health systems wanting to expand their reach. But according to JLL’s Dan Squiers, it also offers an opportunity.

As their executive vice president and healthcare lead for Project and Development Services (PDS), he’s been watching the market for decades. And he sees what JLL's 2025 report on outpatient facilities reinforces. As demand for healthcare services continues to rise, so does the need for outpatient spaces. In fact, JLL anticipates outpatient volume to increase more than 10% in the next five years.

As Squiers says: “It's always location.” This outpatient trend follows patients to meet them where they are. “They have a big population to serve, and they want to do it effectively.”

Dr. Keith Sale, Physician Vice President for ambulatory services at University of Kansas Health System (UKHS) agrees. “Whether it's primary care or other disciplines, people want to go where it's five minutes away,” he says.

When the UKHS launched their retail-inspired clinic in 2023, the waiting list was full before they even opened. “There's an almost insatiable appetite for that type of a local care,” says Sale. “So, we're trying to meet that by putting clinics in places where people are.”

To do this in a market where MOB construction is cooling, health providers are exploring what JLL refers to as “adjacent property types.” 

“From a space allocation and availability perspective, we're starting to see people think outside the box,” says Squiers. Or inside the box, as it were. If MOB vacancy is nil and construction costs too high, big box retail stores with availability make a good option.

So do large multi-story malls. “There are ancillary buildings around the footprint of the mall that offer an opportunity” says Squiers. “There could be restaurants, there could be retail, and then amid all that there's an urgent care facility.”

JLL’s report shows that medical buildings are offering stability for investors and health systems. And while regulations and requirements make those outpatient spaces less expensive than comparable inpatient spaces, lucrative specialty providers still have the potential to evolve. JLL points to home health and telehealth as potential headwinds for the outpatient market, but there is always an amount of uncertainty that can’t be projected. Squiers references how COVID impacted our lens on healthcare facilities.

“Space needs to be flexible,” he says. “From an operations standpoint, you need to make sure your facility can adapt when something unexpected occurs. With the right design, buildings can make that shift without a lot of expenditure.”

That’s another arena where modular prefabrication can bring value to outpatient facilities. As programmatic change and the need for alternate specialties arise, the ease with which DIRTT reconfigures to support a new discipline offers return on investment.

“DIRTT has really grown in their technology in terms of how they modularize clinic room walls. All the infrastructure is inside the cavity, which is a good thing, versus drywall studs. Those modular spaces are flexible, and they're easy to move into different configurations,” he says. “I think the flexibility of the space is a value.”