Real Estate and the Texas Medical Center: Q&A with Bob Parsley of Colliers International
HOUSTON – (Realty News Report) – Mention Houston to a non-resident and the first thing they usually mention is energy. Increasingly, the second is medicine – and for a good reason. The Texas Medical Center (TMC) is the largest medical complex in the world—and home to the brightest minds in medicine. The sheer size and operation of the TMC is staggering: TMC’s campus encompasses 50 million developed square feet and boasts the world’s largest children’s hospital and the world’s largest cancer hospital. To find out where what the future holds for the TMC, Realty News Report spoke with one of the experts on the TMC area, Robert S. Parsley, SIOR, co-chairman & principal in the Houston office of Colliers International. Bob currently serves as a member of Colliers’ Occupier Services Group, Healthcare Services Group and Law Firm Services Group and has been one of the top two producers in the Colliers Houston office for the past 15 years.
Realty News Report: With 21 hospitals, three medical schools and over 100,000 employees, the Texas Medical Center has a huge impact on the Houston economy. Tell us about how the TMC has changed Houston.
Robert S. Parsley: The Texas Medical Center (TMC) – the world’s largest medical center – with one of the highest densities of clinical facilities for patient care, basic science, and translational research. TMC represents one of Houston’s major economic drivers and core industries with an estimated regional annual economic impact of $35 billion. Hermann Hospital was the first hospital to open and admit its first patient in 1925. The area surrounding Hermann Hospital was forest and swampland, but is now home to 56 hospitals, medical schools, and other institutions, and hosts more than 8 million patients each year, including 750,000 emergency patients. The growth of the TMC is the result of visionary thinking and great leadership. Thanks to strong leaders at each of its member institutions, what started as a cooperative largely focused on infrastructure has transformed into an organization at the forefront of innovation and transformation. Another growth factor of the TMC has been the tremendous philanthropic support of Houstonians and supporters from around the globe as the result of the care and treatment that many have received from the TMC member institutions. A recent example of the generosity of Houstonians is the $101 million gift from Laura and Rusty Walter to Houston Methodist Hospital to support neuroscience research efforts.
Realty News Report: Tell us about the restrictions on developing the 1,345 acres in the Medical Center.
Robert S. Parsley: Anything built within the boundaries of the TMC will be facilities owned and operated by a non-profit institutions. For-profit institutions, such as commercial office buildings, hotels and retail centers are built around the periphery of the TMC. For-profit hospitals like Hospital Corporation of America (HCA) also do not qualify for membership in the TMC.
Realty News Report: How difficult is it to locate land on the perimeter of the TMC?
Robert S. Parsley: Land opportunities around the TMC are limited. Demand for land surrounding the TMC has continued to grow as both TMC and non-TMC medical institutions continue to grow and expand. The boundaries of the TMC continue to grow as member institutions continue to expand the footprints in the market. Growth is mainly concentrated south of the TMC where available land for expansion exists.
Realty News Report: There seems to be a lot of expectations about the TMC3 collaborative research campus that’s under development. Exactly what is the TMC3?
Robert S. Parsley: TMC3 is a massive collaboration among existing institutions in the TMC. It will be a biomedical research hub on 30+ acres where researchers and industry experts will collaborate and pioneer advancements in therapeutics, medical devices, regenerative medicine, genomics, and data science, among other areas. The goal of TMC3 is to enforce and encourage collaboration among TMC institutions to break down barriers among the institutions and accelerate commercialization of new ideas and products that result from this increased research. This should make the TMC a more attractive place for investors. It is expected that a major focus will be on the development of new medical device and biotech companies. Groundbreaking is scheduled for 2019 with an estimated completion in 2022 according to the TMC. It is projected that the new TMC3 will generate more than a $5.2 billion stimulus to Texas and create 30,000 new jobs, according to a third-party economic impact study by Silverlode Consulting conducted in November 2017.
Realty News Report: The stated goal is for the TMC3 to transform Houston into the “Third Coast” of life sciences competing with Boston and San Francisco in advancing research and discovery. How do you see that unfolding in the years ahead?
Robert S. Parsley: TMC3 will be transformational as an economic engine for Houston and the state of Texas. It will attract companies focused on life sciences, medical devices and biosciences and further the groundbreaking research that’s already taking place. Just recently Houston scientist, Dr. Jim Allison, won the 2018 Nobel Prize in Medicine. That’s the level of work that is happening within the TMC and this project will take all of that into the next generation. These industries will become a major economic engine for Houston in the future, and TMC3 is vitally important to continued growth and diversification.
Realty News Report: In terms of real estate and medical space, what is needed most in the TMC?
Robert S. Parsley: The TMC Innovation Institute is an example of the future development in the TMC. It has been established within the TMC and is shaping the future of health care by uniting promising innovators with the best minds in academia, science and medicine. Its programs help startups streamline the development of therapeutic, diagnostic, medical device and digital health breakthroughs in world’s largest medical complex. The TMCx Accelerator is an example of programs located in the TMC Innovation Institute. The TMCx Accelerator program provides startup companies with shared workspace, a curriculum tailored to the needs of health care entrepreneurs and the guidance of over 200 advisors from the front lines of the industry. Companies have access to the world’s largest medical center, all without membership fees or equity sharing. Another example of the growth of innovation development within the TMC Innovation Institute is the opening of a JLabs, a premier life science incubator empowering and enabling innovators to deliver life enhancing health and wellness solutions to people around the globe.
Realty News Report: In the long term, what do you see happening in the TMC and surrounding area over the next 10 or 15 years?
Robert S. Parsley: The TMC will continue to be one of Houston economic growth engines. The tremendous scientific and medical discoveries will cause the TMC to grow as we watch the commercialization of discoveries made in TMC3 and the TMC Innovation Institute. Attracting the leaders in healthcare to the TMC will be another reason for its continued growth.
Realty News Report: The life sciences venture capital sources – will they emerge to support this?
Robert S. Parsley: With the leadership and investment of the TMC toward the goal of being the “third coast” of medical innovation, they have established the baseline for a healthy, expanding and profitable innovation ecosystem. With attractive investment opportunities, we expect to see an increase in domestic and international life science venture capital firms establishing a permanent presence in Houston. In addition, Houston should aggressively recruit up and coming medical device and biotech companies to establish their headquarters in Houston. These represent both buyers of early stage innovation companies as well as supply experienced management talent to feed the growing pipeline of companies. These two additions to the ecosystem will ensure Houston and TMC will succeed in having a world class ecosystem for commercializing medical innovation and generating a diversified source of economic prosperity for Houston.