2025 Fall Healthcare Report

Healthcare Real Estate Trends

Strong Demand, Rising Costs, and the Outpatient Shift Redefine the Market Landscape

The medical office building (MOB) sector is currently experiencing strong performance amid a changing healthcare delivery landscape. Occupancy levels in major U.S. markets are high, exceeding 90 percent, while new construction has been limited due to high costs and tight financing conditions. The demand for tenants is driven by fundamental, non-cyclical factors, such as an aging population, the ongoing shift toward outpatient care, and long-term leases secured by health systems and larger providers. These factors contribute to resilience in the face of economic challenges. On the investment side, although transaction volumes have decreased from the peak levels of 2022, interest from investors remains strong because of the stability of income streams. MOBs are recognized in commercial real estate as a growth-oriented, lower-risk segment, though their success relies on asset quality, location, and the creditworthiness of tenants.

From the tenant's perspective: 

• Healthcare providers are continuing to migrate services away from traditional inpatient hospital settings and toward outpatient clinics, specialty suites, and MOBs located off or near hospital campuses.

• Healthcare tenants typically need specialized build-outs and tend to sign longer-term leases, which come with higher switching costs that give landlords an advantage. However, these tenants are also under pressure to adapt due to workforce shortages, technological advancements, and changes in care delivery models. As a result, they seek flexibility and locations that support value-based care and facilitate multi-specialty collaboration.
  
   

Download the full healthcare sector industry report to learn more.