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The national average price per square foot for medical office buildings (MOBs) reached $296 in the first half of 2023, and occupancy rates have remained steady at 91.5%–92.5% for over a decade, indicating that demand for this asset class remains strong.
Investors recognize the value stable tenants, long-term leases, and the resilience of healthcare real estate but with high competition, simply owning a MOB in real estate isn’t enough.
Maximizing returns requires strategic execution, from selecting the right properties to optimizing MOB lease structures and capitalizing on market trends. Investors need key strategies to ensure that investing in medical office buildings delivers the best possible returns.
MOBs are purpose-built real estate assets that support healthcare providers. Unlike traditional office spaces, MOBs are equipped with specialized infrastructure, exam rooms, waiting areas, and advanced HVAC systems to meet medical professionals' and patients' needs. High-quality soundproofing ensures privacy and confidentiality, making the MOB in a healthcare setting uniquely designed for long-term medical use.
These buildings are strategically located near hospitals, nursing homes, or healthcare hubs. Some are on-campus with built-in referral networks, while others are off-campus to serve suburban or rural communities. MOBs are leased or sold to physicians, dentists, and outpatient specialists, creating strong opportunities for MOBs in real estate investing.
MOBs are home to various healthcare tenants, physicians, dentists, specialists, and outpatient care providers. While some doctors own their properties, many prefer to lease or sell their real estate to focus on patient care. This creates substantial investment opportunities for real estate groups and investors seeking stable, long-term tenants.
Investing in medical office buildings can provide stable income streams and long-term appreciation, but success requires innovation.
In real estate, location is everything, and MOBs are no exception. Strong demographics, population growth, and aging communities drive healthcare demand. A well-placed MOB in healthcare markets ensures long-term occupancy and referral networks.
To find the best investment opportunities, conduct a detailed demographic analysis. Look for:
A well-located MOB with a diverse mix of healthcare providers creates a built-in referral network — driving patient volume and ensuring long-term occupancy.
Our blog “How To Perform Commercial Property Market Analysis” can help significantly.
MOB investors should evaluate financing options such as SBA loans, CMBS financing, and traditional bank loans. Partnering with lenders experienced in medical office building real estate often yields better loan terms and market insights. MOB investors have multiple options, including:
Partnering with lenders who specialize in healthcare real estate can provide better loan terms and valuable market insights. Smart financing leads to higher return on investment (ROI).
Strong tenant relationships, responsive maintenance, and competitive MOB lease terms keep high-credit healthcare providers in place. Because providers rarely relocate, efficient management ensures consistent returns. Key strategies include:
Tenant retention is key — when healthcare providers set up shop, they rarely move. Keeping your property in top condition ensures steady income and minimizes vacancies.
Capital improvements like upgraded HVAC systems, modernized waiting areas, and telehealth-ready spaces make a MOB in real estate more competitive. Energy-efficient upgrades also reduce costs and appeal to sustainability-focused tenants. Investing in innovative capital improvements enhances both functionality and appeal. Prioritize:
These upgrades not only increase rental rates but also boost overall property value.
Diversify your tenant mix, secure long-term leases, and ensure compliance with healthcare regulations. A risk management strategy strengthens the durability of your investments in medical office buildings. Every investment carries risk, but savvy investors know how to protect their assets. Key risk mitigation strategies:
By taking a proactive approach to risk management, you safeguard your investment and set yourself up for consistent long-term returns.
MOB in healthcare real estate has consistently outperformed other asset classes due to essential service demand, recession resistance, and long-term leases. Even during financial downturns, MOBs maintained strong occupancy, proving their stability.
With demographic growth, aging populations, and rising healthcare needs, the demand for outpatient care ensures investing in medical office buildings remains one of the most recession-resistant real estate strategies.
Historically, MOBs have proven recession-resistant. During the 2008 financial crisis, while many commercial real estate sectors struggled with declining occupancy and rent reductions, MOBs retained over 90% occupancy rates, as healthcare providers remained operational to meet essential patient needs. Even during the COVID-19 pandemic in 2020 and 2021, 90% of healthcare real estate firms reported that their occupancy rates remained stable or increased, highlighting the sector’s reliability.
The demand for healthcare services continues to rise, fueled by aging demographics, population growth, and advancements in medical technology. The 65-plus age group — the largest consumers of healthcare services — is projected to grow from 58 million in 2022 to over 80 million by 2040. This aging population drives sustained demand for outpatient care, specialty medical services, and long-term care facilities, making MOB investments one of the most secure and future-proof opportunities in commercial real estate.
With long-term leases, strong tenant retention, and growing demand, MOBs offer investors a consistent income stream and a hedge against market volatility. This combination of historical resilience and future growth potential makes MOBs one of the most reliable investment classes in commercial real estate today.
MOBs are built for resilience. Unlike traditional office spaces that struggle during downturns, MOBs thrive due to the essential nature of healthcare. The aging baby boomer population is fueling long-term demand for outpatient services, while the shift toward preventive healthcare, wellness services, and specialized treatments is increasing the need for well-located medical facilities.
While telemedicine has grown, in-person visits for diagnostics, procedures, and treatments remain essential, reinforcing MOBs as a must-have asset. MOBs offer superior tenant retention, higher occupancy rates, and more predictable income streams than general office spaces, making them a safe-haven investment during economic uncertainty.
Tax benefits are a massive advantage for MOB investors looking to optimize cash flow and reduce taxable income. The Tax Cuts and Jobs Act of 2017 allows eligible MOB owners to take advantage of accelerated or bonus depreciation, leading to more significant upfront tax deductions.
This allows investors to offset gains from other assets, improving portfolio-wide tax efficiency. Early tax benefits free up capital for those who qualify, making it easier to expand their real estate holdings faster. Savvy investors use this advantage to scale their portfolios while maintaining healthy cash flow.
To learn more about real estate tax strategies, read our blog: “Commercial Real Estate Taxation: Tax Strategies for CRE Investors.”
The fundamentals of MOB leasing create predictable, long-term revenue streams — a significant advantage for investors seeking stability. Healthcare providers — physicians, dentists, and specialists — typically have high creditworthiness and financial stability, making them reliable long-term tenants.
MOBs near hospitals, healthcare hubs, and referral networks attract quality tenants who rely on patient flow and provider collaboration. Additionally, medical tenants rarely relocate due to the high moving equipment, infrastructure, and patient retention costs. This results in higher lease renewal rates and fewer vacancies, ensuring strong occupancy and stable rental income.
For investors looking to diversify their real estate portfolios, MOBs provide a powerful hedge against market volatility. MOBs house a variety of healthcare providers, from primary care physicians and dermatologists to imaging centers and surgical specialists.
A diverse tenant base protects against income disruptions if one provider leaves, ensuring financial stability. Additionally, the referral ecosystem within MOBs creates built-in demand, increasing tenant longevity and overall property value. Unlike traditional office buildings, MOBs aren’t affected by remote work trends and continue to benefit from the growing need for healthcare services.
MOB in healthcare real estate has consistently outperformed other asset classes due to essential service demand, recession resistance, and long-term leases. Even during financial downturns, MOBs maintained strong occupancy, proving their stability.With demographic growth, aging populations, and rising healthcare needs, the demand for outpatient care ensures investing in medical office buildings remains one of the most recession-resistant real estate strategies.
With over 28 years of experience in commercial real estate investing, my firm has acquired and managed billions in assets, specializing in medical office buildings and essential real estate investments that generate consistent cash flow and long-term value.
If you’re serious about investing in stable, high-performing commercial real estate, let’s connect.
Yes, investing in medical office buildings is widely considered one of the strongest options in commercial real estate because healthcare services remain essential across economic cycles. Medical tenants typically sign long-term leases, making medical office real estate investing more stable than in traditional office or retail sectors. These buildings also benefit from predictable patient demand and demographic growth, supporting strong occupancy rates. Even during downturns, healthcare real estate investment remains resilient due to the constant need for outpatient care. For investors seeking predictable income, steady returns, and long-term tenant reliability, MOBs often outperform other commercial real estate investment strategies.
The value of an MOB increases when it is well located near hospitals, healthcare hubs, or growing communities with high patient demand. Buildings with modern infrastructure and efficient medical office property management tend to attract long-term, creditworthy tenants. A diversified tenant mix, including outpatient services and specialists, also increases financial stability for investors. Upgraded systems, telehealth-ready layouts, and ADA-compliant designs drive higher appeal within medical office real estate. These factors make MOBs one of the most profitable commercial real estate opportunities for long-term growth.
In real estate, MOB stands for Medical Office Building, a specialized property explicitly designed for healthcare providers. A medical office building (what is a medical office building) typically includes exam rooms, diagnostic spaces, and treatment areas that support modern medical operations. MOBs are considered part of the MOB real estate sector, known for strong tenant stability and long-term occupancy. Because healthcare services remain essential, healthcare real estate investment in MOBs offers reliable demand compared to other asset types. For investors seeking dependable income, MOBs serve as a strategic component of diversified investment in property portfolios.
A long-term lease in medical office real estate typically ranges from 7 to 15 years and provides stable income for property owners. Healthcare tenants often prefer long-term commitments due to the high cost of relocating medical equipment and building out specialized spaces. These extended agreements support favorable medical office building cap rates by reducing vacancy risk and turnover costs. Long-term leases also enhance asset stability, which is a significant benefit in healthcare real estate investment. For investors, understanding how these leases work is essential to evaluating how real estate investment produces predictable cash flow.
