Transaction volumes and pricing remain muted as a result of elevated interest rates and economic uncertainty.
In this report, we will explore the current state of the medical outpatient building capital markets, covering the following topics:
- National Transaction Volume and Pricing
- Cap Rate Trends
- Portfolio vs Single Asset Trends
- On-campus vs Off-campus Trends
The sharp uptick in volume and pricing for medical outpatient buildings (MOBs) between 2020 and early 2022 has given way to more subdued activity as the macro-economic landscape continues to recover from inflation and subsequent rate hikes. Despite this, there remains continued resiliency in healthcare real estate. Occupancies remain substantially higher and more stable than the current office sector. MOBs also did not see the level of overbuilding in development pipelines that industrial or multifamily saw over the 2021 – 2023 period.
Since our last report, ongoing secular demographic drivers of healthcare coupled with the exogenous event of the global pandemic prompted many institutional investors to become new entrants into the MOB market. Medical outpatient assets have not been immune to the rising rate environment and lack of liquidity, with transaction volume slowing and cap rates beginning to expand. While other asset types have been more adversely affected along key indicators like vacancy and rents, medical outpatient buildings remained resilient. As a result, the sector continues to draw interest from investors and will likely see a growth in transaction activity as debt and equity markets begin to reinitiate acquisitions.
