CAPITAL WATCH ISSUE 1 2018

Apps such as GP at hand (Babylon Health) are set to revolutionise how we interact with GPs N onetheless, these are expected to be short-term factors, and overseas and national operators continue to focus on the longer-term opportunities in the market. Economic challenges are being dealt with and though operating costs continue to rise ahead of inflation, increased self-pay, an ageing population and expectations of a recovery in health tourism are encouraging and sustaining new and existing operators. Occupational healthcare demand outstrips supply and in particular, increased demand for representation in the Harley Street Medical Area (HSMA) has been evident, with rents approaching and in some cases exceeding £90 per sq ft. We are also seeing healthcare occupiers showing a preference for long leases - mostly in excess of 20 years. The arrival of major overseas operators into the London market - such as the Cleveland Clinic, Schoen, the Mayo Clinic and Oxford University - will change both the operational landscape and working practices in the private healthcare market. These groups, along with other European and global investors, represent an unprecedented surge in operational and tenant investment into London. The Cleveland Clinic, for example, are investing circa $1bn alone in 33 Grosvenor Place, in what will be the first major new central London hospital 30+ years. The gradual integration of private and public health systems in the UK is particularly evident in central London, where at least three major Foundation Trusts (FT) now have representation for their private divisions and associated activities. Acting as a gateway to their main hospitals, these FT private clinics can be highly profitable and generate surpluses to offset deficits in their NHS work. The next decade will see a radical overhaul of the central London healthcare real estate offer and portfolio, with the major FTs - notably Guy’s, St Thomas’, King’s and UCH - being encouraged to make better use of their prime estates in value and operational terms. At the same time, the NHS property strategy team is tasked with making the estate more efficient to save money, free up resources and provide buildings suitable for new ways of delivering healthcare. These moves (along with private initiatives inside and outside the HSMA) will complement the existing larger- scale offerings to the north in the Knowledge Quarter - centred around the Francis Crick Institute and Wellcome Foundation - and west towards the Imperial College knowledge hub at White City. The HSMA is constantly seeking to find ways of advancing in the fields of medical science, research and technology. Projects in the pipeline include bringing laboratories into the HSMA, the introduction and greater integration of MedTech, new consulting and diagnostic houses, and incubator units with short flexible leases, as and when required. From a wider perspective, the sector will need to adapt to and anticipate the impact of digital healthcare treatment. Apps such as GP at hand (Babylon Health) are set to revolutionise how we interact with GPs, while healthcare delivery by handheld and wearable technology is expected to increase as the population takes practical and financial control of their own healthcare - by choice or necessity. CUSHMAN & WAKEFIELD 16 ALTERNATIVES