The Forces Reshaping Healthcare Capital Planning

By Florim Kukaj, AIA, E4H

The healthcare market across the Tri-State region remains active, but the forces shaping capital planning have changed. Investment continues, though with a more disciplined mindset than in recent years.

Health systems are still investing, but elevated interest rates, labor volatility, and persistent construction inflation continue to pressure project budgets. Those pressures are forcing intentional decisions earlier, placing greater importance on phasing, speed to market, operational impact, and return on capital.

Several simultaneous forces are reshaping the healthcare real estate market.

Outpatient continues to outperform other healthcare asset classes. JLL reported medical outpatient occupancy was at 92.7 percent for Q4 2025, with rents growing 3.3 percent year over year. CBRE noted that roughly 80 percent of new medical office development is now taking place away from hospital campuses, increasingly in residential and retail corridors.

Demographics are another force. New Jersey’s population over 65 increased by 22 percent over the past decade, fueling demand for imaging, oncology, cardiology, orthopedics, infusion, and rehabilitation services. That demand is likely to shape capital priorities in the years ahead.

Policy is also reinforcing the move to outpatient. In 2026, CMS increased reimbursement by 2.6 percent for procedures performed in outpatient settings and ambulatory surgery centers, while continuing to remove procedures from the inpatient-only list, giving providers more reason to move care into lower-cost outpatient settings. This further incentivizes providers to shift services to less costly outpatient environments.

Behavioral health is among healthcare’s fastest-growing segments, with Becker’s projecting 6.4 percent annual growth through 2034 and outpatient behavioral services outpacing many traditional care sectors. Yet it remains one of the harder healthcare uses to place, as many landlords still approach it cautiously due to perceived security concerns, patient stigma, and tenant mix considerations.

Hospitals must also reinvest in aging campuses. Deferred maintenance and infrastructure renewal compete directly with strategic growth spending. Central plant upgrades, electrical resiliency, HVAC modernization, and aging utility infrastructure are taking an ever-growing share of capital budgets.

Another force receives less attention: the workforce needed to operate and support these facilities is under strain.

Much of the industry’s experienced facilities workforce is nearing retirement, particularly among plant operations and infrastructure staff who understand how healthcare campuses truly function. Those still in the workforce are having to adapt to increasingly digitized building systems, while the next generation is not entering the field in equal numbers or with the same enthusiasm for the less-visible operational work required to replace them.

Financial pressure is moving downstream to consultants. As budgets tighten, design and consulting fees are often compressed, forcing A/E firms to run leaner teams and reduce investment in mentorship and professional development. Inevitably, that weakens the pipeline of professionals gaining healthcare experience, many of whom often transition into owner-side facilities and capital planning roles.

Organizations like AIA, AMFP, and HFMSNJ are helping address that gap through mentorship, young professional development, and cross-disciplinary education, but the industry still has work to do.

Healthcare will see continued growth in 2026. What matters now is how capital is prioritized, where projects are placed, and whether the industry has the talent to support increasingly complex environments.

For real estate professionals serving healthcare systems, success now depends on more than finding available space. It requires understanding service line strategy, operational fit, landlord constraints, and the broader forces shaping where healthcare goes next.

Florim Kukaj, associate principal at E4H, is a healthcare architect, project manager, and industry leader with over 15 years of experience leading capital projects for major health systems across New York and New Jersey.