Outpatient Care Boom Drives Surge In Medical Office Demand

Medical office buildings (MOBs) are proving to be a stabilizing segment within commercial real estate as the healthcare industry rapidly evolves.

According to a Colliers report, this transformation is being driven by shifting patient expectations, advances in technology, workforce challenges, and financial pressures.

Demand is being fueled in large part by the continued expansion of outpatient and ambulatory care, increasing the need for surgery centers, urgent care facilities, and specialty clinics. At the same time, the growing use of digital health tools and artificial intelligence is improving efficiency and supporting clinical decision-making.

Even with this growth, demand for MOB space is outpacing supply. Since 2021, the top 50 U.S. markets have experienced a shortfall of 3.1 million square feet, while the top 100 markets are behind by 4.7 million square feet. Healthcare providers are responding by expanding into high-growth outpatient locations while consolidating outdated facilities.

Vacancy rates remain low, hovering between 7.5% and 7.7%, with average occupancy reaching 92.5% in 2025. Long-term leases and the essential nature of healthcare services contribute to consistent occupancy, helping MOBs remain resilient even as other commercial real estate sectors face uncertainty. Declining vacancy rates reflect strong demand, limited supply, and favorable demographic trends.

Compared to traditional office properties, MOBs have maintained lower and more stable vacancy rates from 2018 through 2025. However, limited availability is making it harder for providers to expand or upgrade, pushing some to reinvest in existing properties.

Rental rates continue to rise, averaging $26.35 per square foot in the top 50 markets and $25.79 in the top 100—an increase of roughly 17–18% since 2018. High-quality, well-located outpatient facilities are especially competitive, driven in part by the aging U.S. population, which is increasing demand for healthcare services.

Investment activity remains strong, with healthcare real estate reaching $10.6 billion in 2025. Investors are particularly focused on Class A properties, on-campus developments, and high-acuity outpatient assets. To support growth while maintaining flexibility, private equity firms, institutional investors, and operators are increasingly using strategies such as joint ventures and recapitalizations.

Source: GlobeSt.