The expansion of the healthcare sector in the wake of the COVID-19 pandemic will be an important part of the recovery for office demand, JLL says.

The firm believes increased spending on healthcare by the private and public sector as a result of the current environment should have a positive impact on the NSW office market. 

At a glance:

• JLL believes Australia's healthcare sector is well-positioned to assist in the recovery of the country's office market from COVID-19.
• The firm believes the sector is supported by long-term demographic drivers, such as an ageing population and growth in spending on healthcare services.
• JLL’s latest Q1 2020 figures on relocation activity to Macquarie Park by industry type, tenants involved in the healthcare and social assistance sector are the fourth largest driver of office leasing demand. 

JLL’s NSW Head of Office Leasing, Dan Kernaghan said it was anticipated there would be a renewed focus on the need for higher quality facilities and services across the Asia Pacific region.

“Healthcare was already a growing sector of the economy and we anticipate the expansion in healthcare-related activities will accelerate in 2021 and over the medium term," he said.

“This will be a positive factor for the demand for office accommodation by these expanding healthcare firms and an important factor in the recovery for office leasing markets."

Source: JLL

According to research from JLL healthcare in Australia sits at tenth in terms of the sectors driving office leasing demand. 

JLL Research figures for Q1 2020 show that healthcare and social assistance made up 73,155 sqm of Australian gross leasing volume by sector over a three year period from Q1 2017 to Q1 2020. 

Mr Kernaghan said Australia’s ageing population and the need to increase spending on healthcare meant the volume was likely to increase going forward.

“The changing conditions and impact of COVID-19 will create new opportunities for growing sectors and new entrants in sectors such as technology and healthcare.

“Areas like Westmead and Macquarie Park have a strong healthcare and university presence and we also see a potential for pharmaceutical companies to expand their footprint.

“If we look at JLL’s latest Q1 2020 figures on relocation activity to Macquarie Park by industry type, tenants involved in the healthcare and social assistance sector are the fourth largest driver of office leasing demand.

"Public Administration now has a much larger share due to Transport NSW moving to 45-61 Waterloo Road."

JLL’s Head of Research for Australia, Andrew Ballantyne, said the country's healthcare sector was supported by long-term demographic drivers, such as an ageing population and growth in spending on healthcare services.

“The proportion of the population above 55 years of age continues to grow – in fact, it has grown by 185,300 persons, on average, per annum since 2010," he said.

"Generally, spending on healthcare services begins to rise exponentially once a person reaches 55 years of age. 

“The healthcare sector has benefitted from this demographic trend – healthcare employment over the last ten years has risen by 3.5 per cent per annum, double the overall employment growth rate of 1.8 per cent.”

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