Big Data Tech for the Healthcare and Energy Industries: Paving the Way for Houston’s Future

Monday, March 19, 2018

Real estate indicators by HFF Associate Director of Research Justin Boyar in HFF's Houston office.

Panelists at the Urban Land Institute's Medical Real Estate and Innovation Leadership Luncheon on Thursday, February 22, in Houston, did not appear particularly bothered by Amazon’s decision to not include Houston in its top-20 list of finalists for its second North American headquarters. After all, noted Bill McKeon, president and CEO of the Texas Medical Center, the TMC is the largest customer of Amazon through its Amazon Web Services cloud-computing platform, which gives Houston leverage with the tech giant. Amazon also announced on Tuesday, January 30, 2018, that it plans to enter the healthcare space, teaming up with Berkshire Hathaway – the holding company led by billionaire investor Warren Buffet – and JPMorgan Chase, the largest bank in the U.S. by total assets – to form an independent healthcare company for their employees in the United States. With CVS’s recent acquisition of Aetna, the lines between pharmacy and health insurer are becoming increasingly blurred, and Amazon has indicated that it could also enter the pharmacy business. Jamie Dimon, CEO of JPMorgan Chase, said in a statement that the partnership between the three companies – which seeks to disrupt the American healthcare industry – could eventually be expanded to all Americans. What better place for Amazon to look to than the Texas Medical Center, the world’s largest medical complex?

Courtesy of the Texas Medical Center

Houston is home to the largest collection of medical clinical trials data – as well as the largest collection of energy industry data – in the world, which gives the city a natural advantage over other cities. In the era of Big Data, collecting and analyzing this data for both industries takes on increasing importance, and also employs similar technologies. Efforts are currently underway on a consortium between leaders of the TMC and Houston’s Energy Corridor to create a data science center, which will not be tied to any academic flag; it will welcome all academia with open arms. Apple, Google, IBM, AT&T and others have already expressed interest. This initiative is also receiving a big push from the Mayor of Houston’s office as well as the Greater Houston Partnership. In the wake of Amazon’s rejection of Houston’s bid, the animal spirits are stirring among Houston’s notoriously proactive and business-friendly civic leadership. Previous efforts by the University of Texas System to create a data science center in Houston without first disclosing their plans – nor involving the University of Houston System – were met with fierce opposition. Part of what drove this battle of the wills were the tremendous opportunities that lie ahead. In October 2017 – less than a year after the University of Texas folded its Houston data center plans amidst significant political pressure – the University of Houston announced that it would launch a new Institute for Data Science. However, this institute was in the works years before the UT center was announced.  

In a prophetic sign of things to come, Apple has already created a platform that the TMC is exploring, which involves population management – leveraging smartphones and wireless devices to manage patients between the period when patients return home and when they return for their next visit. The idea is for physicians to be able to more closely monitor their patients. It will also help prioritize patient visits – who really needs to come in for a visit and in what order. For example, 20 percent of heart surgery patients return for a visit, so managing them at home can be a tremendous help with the healing process. Houston is the perfect place to pilot this technology, as the Texas Medical Center, which covers some 60 million square feet of medical space and is expected to grow 10 percent in size in two years – serves some 10 million patients annually. 

It is no secret that oil and gas exploration and production companies are already employing more sophisticated data-driven technology than ever to drive cost efficiencies. Wells in the Permian Basin today can be drilled from a corporate office floor in Houston by Chevron, ConocoPhillips and others, all by the push of a button. Utilization of Big Data will continue to be a trend in the energy space.

The TMC 3 megaproject will tie together Houston’s potential for a biotech research hub. The groundbreaking of this planned $1.5 billion project, a collaboration between several competing academic systems – plans that are four years in the making – should be announced soon, according to McKeon. “It is too important to Houston not to go through with it”, Shawn Cloonan, COO of the TMC recently stated at a Bisnow national healthcare conference. Following the model of Boston’s Kendall Square and San Francisco’s Mission Bay, Houston’s most prominent medical institutions plan to leverage multi-institutional clinical trials data to forge exciting and groundbreaking discoveries in genomics and other fields, which can then be commercialized in the private sector. The medical center's stated goal is to become a leader in turning academic research into a pharmaceutical, medical device and digital health engine. Green shoots of Houston’s medical start-up scene are already evident. In 2014. The TMC opened its state-of-the-art, 100,000-square-foot TMCx accelerator in a former Nabisco factory, located next to the medical center. Today this site also houses the TMCx+ (a medical tech incubator), JLABS @ TMC (Johnson & Johnson’s first medical device prototype lab in the world) and the AT&T Foundry healthcare innovation center. 

Houston’s start-up community also benefits from two new tech incubators. Houston Exponential was formed in October 2017 through a combination of the Greater Houston Partnership's Innovation Roundtable, Mayor Turner’s Innovation and Technology Task Force and the Houston Technology Center to bolster Houston’s innovation ecosystem and drive the region to become a top 10 startup ecosystem by 2022. It will serve as a hub and catalyst for a growing community of startup ventures. Station Houston, which launched in March 2016, connects early stage tech start-ups and entrepreneurs with capital, customers and talent. It is already home to 150 early stage start-ups, 300 members, 120 mentors and strategic relationships with corporations that represent Houston’s key industries.

Houston, we don’t have a problem; we have an emerging medical and energy tech scene on the rise.

About Justin Boyar

Justin Boyar is an associate director of Research for HFF’s Houston office. He has more than 10 years of real estate industry experience and is focused on executing in-depth research and analysis of economic, property and capital markets trends. Mr. Boyar is also responsible for providing extensive market reports, client presentations and deal-specific analysis for the debt placement and investment sales groups.

Mr. Boyar joined HFF in June 2015. Prior to joining the firm, he was a senior business analyst with a global professional services and investment management company specializing in real estate and also served as a consultant for Greater Latin America in Panama City, Panama. He began his career in commercial real estate as a development associate in New Orleans, Louisiana.

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