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MOBs Continue To See Demand As They Adapt To Market Changes

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The medical office building (MOB) sector continues to be favored by investors as a stable asset despite real estate challenges and disruptions brought on by the pandemic, according to JLL’s (Chicago) new “Healthcare and Medical Office Perspective.”

The recent report explores key themes impacting U.S. healthcare systems and medical office owners, including labor challenges, payor and reimbursement pressures, elevated costs, and industry disruptions

“Facilities offer both risks and opportunities to healthcare providers, and, despite the challenges, the critical nature of healthcare and large tailwinds from a growing and aging population continue to make healthcare real estate one of the most stable asset classes for investors,” Jay Johnson, National Practice Leader, Healthcare Markets, JLL, said in a press release.

Specifically, medical office occupancy is relatively stronger than the commercial office sector and was significantly less disrupted by pandemic. Medical office asking rents averaged 2 percent growth year over year for the past five years and reached an average $23 per square foot triple net by mid-year 2022, reports JLL.

Medical office sales reached $9.2 billion in the first half of 2022 after a record performance and investor interest in 2021. JLL anticipates 2022 to close at another record year. The strong demand for healthcare services and the continued shift to outpatient care is expected to assure healthy investor appetite for MOBs.

 

Source: healthcare design

25 Fastest Growing Medical Office Building Markets

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42floors.com gathered data from corporate real estate research and listing platform CommercialEdge to analyze the last decade of medical office building construction activity between 2012 and 2021.

The report examined 25 major commercial real estate markets, analyzing how deliveries and sales volumes in these markets progressed over the last 10 years. (Read more about the methodology here.)

Minneapolis-St. Paul (Minn.) was the fastest growing medical office building market, seeing 24 percent growth over 10 years, according to the report from 42floors.com.

The 10-year growth of the top 25 medical office building markets, according to 42floors.com:

1. Minneapolis-St. Paul (Minn.) – 24 percent

2. Richmond-Tidewater (Va.) – 22 percent

3. Philadelphia – 21 percent

4. Tampa (Fla.) – 18 percent

5. Chicago – 18 percent

6. Dallas – 16 percent

7. San Francisco – 16 percent

8. Houston – 15 percent

9. Denver – 14 percent

10. Indianapolis – 14 percent

11. Atlanta – 14 percent

12. Bridgeport-New Haven (Conn.) – 13 percent

13. San Francisco Bay Area – 12 percent

14. Baltimore – 11 percent

15. Seattle – 10 percent

16. Miami: 10 percent

17. Washington, D.C. – 10 percent

18. Phoenix – 9 percent

19. Los Angeles – 9 percent

20. Boston – 9 percent

21. San Diego – 8 percent

22. New Jersey – 7 percent

23. Orange County (Calif.) – 7 percent

24. Cleveland-Akron (Ohio) – 5 percent

25. Detroit – 5 percent

 

Source: Becker’s ASC Review