Demand Stays Hot For Medical Outpatient Buildings

Medical outpatient buildings (MOBs) are emerging as a standout asset in commercial real estate.

A new 2026 outlook from JLL highlights strong demand driven by an aging U.S. population, while limited new construction is pushing up occupancy rates and rents. At the same time, consolidation among health-care systems and private medical groups is increasing the need for high-quality facilities. Still, the sector faces challenges—particularly policy changes to Medicaid eligibility and ACA subsidies, which could reduce hospital margins by increasing the number of uninsured patients.

Growing Demand For Outpatient Space

Demand for outpatient care is expected to rise significantly, fueled not only by older demographics but also by younger generations placing greater emphasis on health and wellness. Even with potential declines in insurance coverage and uncertain population growth, outpatient services are projected to expand much faster than inpatient care.

JLL forecasts an increase of 227.4 million outpatient visits over the next five years, largely due to demographic shifts and rising disease prevalence. While reduced insurance coverage may lead to about 14.9 million fewer visits, the overall growth trend remains strong.

However, more visits won’t automatically translate into proportional space demand. Health-care providers are focusing on cutting costs, improving efficiency, and optimizing their real estate portfolios. This means expansion will be strategic and measured rather than rapid.

Certain specialties tied to aging populations—like physical therapy, orthopedics, and endocrinology—are expected to see sustained growth. Still, staffing shortages in health care could limit how much providers can scale, even when demand is high.

Rent Growth And Limited Supply

Although rent growth has slowed from its 2023 peak, it remains solid at 3.3% as of late 2025. Lease structures are also becoming more aggressive, with more contracts including annual increases of around 3% or adjustments tied to inflation. MOBs have consistently outperformed traditional office properties in rent growth since 2022.

On the supply side, new construction has not kept pace with demand. Development starts hit a low point in 2024 and only slightly recovered in 2025. High land and construction costs have made speculative development difficult, with overall starts down nearly 30% from 2019 levels.

Most new projects are now driven by hospitals and health systems rather than independent developers. These facilities are also becoming more complex, often combining imaging, surgery centers, labs, and physician offices in a single location. Cancer treatment centers are a major area of expansion, with millions of square feet either recently delivered or in development—most of it owned by hospital systems.

Investment Trends And Outlook

Investor interest in MOBs remains strong due to their stable fundamentals. Investment volume reached about $11 billion in 2025, up from 2023 but slightly below 2024 levels. While not as high as the post-pandemic peak in 2022, activity remains healthy.

Institutional investors are playing a larger role, focusing primarily on core-plus, value-add, and opportunistic assets. This concentration can make pricing more challenging for properties outside those categories. Meanwhile, relatively low interest rates are supporting deal activity, increasing competition, and narrowing pricing gaps between buyers and sellers.

Not all MOBs are equally attractive. Facilities offering specialized services—such as ambulatory surgery centers or advanced imaging—are expected to command premium valuations. Overall, JLL anticipates a competitive and strong pricing environment for medical outpatient real estate in 2026.

Source: Commercial Property Executive