Why Medical Office Buildings Are Now Core Real Estate

Medical outpatient buildings (MOBs) have shifted from the periphery to the center of institutional real estate strategy.

Once considered a niche within the broader office sector, they are now viewed as core assets for investors seeking long-term income stability and resilience.

As of mid-2025, occupancy across the top 125 U.S. markets has reached 93.5%, with more than 15.9 million square feet absorbed over the past year. In 42 of those markets, occupancy now exceeds 95%. Tightening conditions are fueling rent growth, with annual increases surpassing 2% in several key areas.

Tenant quality further reinforces the sector’s strength. MOBs are typically anchored by hospitals, health systems, and large physician groups—organizations that provide essential services and demonstrate strong financial durability. These tenants are not swayed by remote work trends or typical market cycles; their operations depend on patient proximity and the continuity of in-person care.

Demographic trends are amplifying this demand. By 2030, one in five Americans will be over 65, driving increased need for outpatient specialties such as cardiology, oncology, and primary care. At the same time, younger patients are demanding greater convenience, digital integration, and community-based access. MOBs are uniquely positioned to meet both generational needs.

Source: Directors Talk Interviews