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Healthcare Market Overview

Despite economic headwinds, the medical office sector continues to outperform by setting record highs for sales volume, asking rents, and pricing. Asking rent for MOBs went up 1.7 percent during the first half of the year. Experts predict a promising outlook for healthcare in 2023 with increased absorption and low vacancy rates. The medical office sector has compelling investment qualities that will always keep investors coming back, namely its long-term leases and stable tenants. The aging population and the ongoing movement toward community-based outpatient treatment as opposed to hospital-based treatment will only further the demand for medical office space over the long term. Additionally, one in five Americans will be 65 or older by 2030, lifting the demand for medical offices.



  • The medical office property sector’s vacancy rate decreased by 40 basis points during the first half of 2022 by eight percent.
  • Net absorption totaled 22.1 million square feet over the 12 months to mid-year 2022.
  • Los Angeles saw the strongest rent growth in the 12 months leading up to Q2 2022 at 3.2 percent.
  • Construction rose with completions of 14 million square feet in the four quarters ending with Q2 2022.

Rents | Vacancy | Construction


In September 2022, 7.5 million square feet of new construction projects started.


Experts are predicting rental rates will continue to rise. In Q1 2022, medical office space net asking rents saw an average increase of 1.7 percent to $22.61 per square foot. Los Angeles led with the highest rent of $35.13 per square foot. The Western U.S. had the largest dollar volume of sales in the second quarter with nearly $1.0 billion in transactions. At the close of the year, overall fundamentals are still strong. Looking at the top 50 metros, data is showing increased occupancy. While construction completions are not what they were pre-pandemic, demand for space has continued to be strong with absorption of 17.7 million square feet in the past year.



By the numbers in the past 12 months

  • Units Delivered: 255
  • Average vacancy rate: 7.4%
  • Average market cap rate: 6%
  • Sales volume: $2.9B


Total investment in MOBs hit $17.2 billion in the four quarters ending with Q2 2022, the highest on record, and a significant increase from $9.6 billion during the preceding 12 months. Additionally, average pricing went up to $397 per square foot during that same timeframe. Revista’s data shows that cap rates are starting to finally ease up as debt prices continue to rise along with inflation and interest rates. After four straight quarters of seeing the median cap rate for MOBs below six percent on a trailing 12-month basis, the data shows that the median cap rate in Q3 was right at six percent.



Top Transactions of the Year


Arizona – Clearwater Living, based in Newport Beach, California, and joint venture partner PGIM paid $255 million to buy properties in PhoenixScottsdale, and Gilbert totaling 554 units. The sale of independent living, assisted living and memory care properties is the highest total price on record paid for a senior housing portfolio in Arizona, and one of the largest in the United States this year, according to CoStar data.


Alabama – Matthews™ Healthcare Division completed the $27.1 million sale of Swaid Vestavia Medical Center, a multi-specialty medical facility located at 1021 Montgomery Highway, Vestavia Hills, AL. The new construction facility spans 40,000 square feet and consists of an ambulatory surgery center and medical office space.


New York In June, Remedy Medical Properties acquired Amherst Medical Center, a 163,200 square foot MOB in Amherst, NY, for $22.5 million. The building, which is under development, is expected to open in the Spring of 2023.


North Carolina – 8300 Health Park, built in 2005 and totaling 185,000 square feet, was acquired in June for $35 million by a partnership of Welltower, according to Wake County property records.

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