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Medical Office Demand Durability Tracker (2026 Outlook)


Executive Summary


  • Resilient Occupancy: Medical office CRE properties continue to exhibit stable, high occupancy levels nationally (generally 90%+ occupied), far outperforming traditional office buildings. Vacancy rates for medical offices hover in the high single-digits (~7–9%) versus ~14% for conventional offices, underscoring the sector’s defensive, recession-resistant nature.

  • Steady Demand & Absorption: Healthcare real estate trends remain positive heading into 2026. An aging population and ongoing shift to outpatient care are driving sustained demand. Net absorption of medical office space has been consistently positive – e.g. ~19 million SF absorbed in 2024 (top 100 markets), a 15% jump year-over-year. New supply delivery has been limited, allowing absorption to outpace completions and pushing occupancy to cyclical highs (92.7% by mid-2025).

  • Sunbelt vs. Mature Markets: Regional differences are pronounced. High-growth Sunbelt markets (Texas, Florida, Arizona) are seeing robust expansion with strong leasing activity and new construction, albeit with slightly higher vacancy due to new deliveries. In contrast, mature markets in the Northeast and Midwest boast very tight vacancies (often <6%) and slower growth. For instance, Texas metros like Houston and San Antonio currently show ~10–11% vacancy from active development, whereas coastal markets like New York and Philadelphia are ~94% occupied on average.

  • Rent Growth & Tenant Quality: Asking rents for medical offices continue a steady climb, reaching record highs in many areas. Nationally, MOB rents have risen ~6.5% cumulatively since 2020, far outpacing the near-zero growth of traditional office rents. Healthcare providers are willing to absorb moderate rent increases due to rising patient volumes and insurance reimbursements. Long lease terms (often 7–10+ years) and creditworthy tenants (e.g. large physician groups and health systems) support strong NOI growth and low turnover.

  • Telehealth Impact: Telehealth adoption and hybrid care models are reshaping space utilization but not eliminating the need for physical clinics. Virtual visits surged (e.g. ~32% of behavioral health visits were via telehealth in 2022, up from ~1% in 2019) and remain popular for routine consults. This is prompting some practices – especially in mental health and primary care – to downsize waiting rooms and exam space or design flexible suites that include telehealth studios. However, in-person care remains essential for most specialties (surgery, diagnostics, etc.), so overall medical office demand remains durable despite digital trends.

  • 2026 Outlook: Looking forward, the 2026 forecast for medical office real estate is highly positive. Expect occupancy rates to remain in the low-90s% range nationally, with high-growth regions backfilling new space and mature markets sustaining near-full occupancy. Healthcare leasing activity should stay strong as providers expand outpatient networks, particularly in high-growth corridors. Rent growth is projected to continue modestly (2–3% annually) given tight supply and built-in lease escalations. Investor interest in the sector is rising as capital markets improve – evidenced by medical office cap rates (~6.5–7%) holding well below those of traditional offices (often 8%+). In short, medical office assets are poised to outperform in 2026, offering stability and income durability for CRE lenders and investors.


Resilient Demand Fundamentals in Healthcare Real Estate


Healthcare demand is steady, not cyclical. Medical offices (MOBs) are underpinned by essential services that people require regardless of economic climate. Even during recessions or the pandemic, patients eventually must attend check-ups, treatments, and procedures – needs that cannot be deferred indefinitely. This inelastic demand insulates healthcare real estate relative to other property types. As the U.S. population grows older and chronic care needs rise, the tailwinds for outpatient facilities are long-term. In fact, a fundamental shift from hospital-based care to outpatient clinics has been underway for years; hospital admissions fell ~10% while outpatient visits jumped ~13% over the past decade. These trends translate into consistent space requirements for medical offices.


Occupancy stability through cycles. Medical office occupancy has proven remarkably durable. Nationwide MOB vacancy averages in the 7–9% range (over 90% occupied), which is roughly half the vacancy rate of traditional office buildings. During the worst of the pandemic, many medical tenants retained their spaces (elective visits were deferred but quickly rebounded by 2021), in stark contrast to general office users who shed space in droves. By mid-2025, medical offices were effectively back in expansion mode, with vacancies tightening again after a brief uptick from new supply. Some markets are even recording record-low vacancies for medical space – for example, San Diego’s medical office vacancy hit its lowest level in 15+ years recently, even as that city’s traditional office vacancy reached a decade high. This consistency highlights the defensive nature of the asset class: healthcare providers typically must maintain a physical presence near patients, yielding high occupancy even when other sectors struggle.


High-credit, “sticky” tenancy. Another factor behind MOB demand durability is the stickiness of tenants. Medical occupants – from group practices to diagnostic labs – invest heavily in build-outs (imaging equipment, surgical suites, specialized plumbing) and cultivate patient loyalties tied to location. This makes them far less footloose than a typical office tenant. Leases of 10+ years with renewal options are common, and healthcare tenants are reluctant to relocate given the high switching costs and risk of losing patients to a new location. Moreover, many tenants are backed by investment-grade health systems or national providers, providing strong credit profiles and reliable rent rolls. The combination of long-term commitments and strong credit quality means medical offices enjoy lower turnover and more stable occupancy than virtually any other CRE segment. Even during economic slowdowns, people continue to seek treatment, and medical tenants seldom default – a pattern that gives lenders confidence in the sector’s cash flow resilience.


Market Fundamentals: Occupancy, Absorption & Rent Trends


Record-high occupancy and positive absorption: U.S. medical office fundamentals are entering 2026 from a position of strength. After several years of demand exceeding supply, national occupancy hit a cyclical peak in 2025 at ~92.7%. Over the 2022–2025 period, approximately 44.4 million square feet of new MOB space delivered across the top 100 metro areas, while a larger 48.9 million square feet was absorbed – driving vacancy down and occupancy up by about 70 basis points in three years. Even in 2024–2025 as interest rates rose, net absorption remained robust. For example, absorption in Q4 2024 alone reached 19 million SF (top 100 markets), up 15% year-over-year. Healthcare leasing activity has largely kept pace with new deliveries, quickly backfilling most new clinics and expansions. Industry data indicate more tenants are seeking space than there are availabilities in many areas, resulting in “tight” conditions where providers have limited options for growth. This dynamic supports landlords’ bargaining power and underpins rising rents.


Rents climbing steadily: Unlike the stagnant rent environment in traditional offices, medical office rents have shown steady growth. National average triple-net rents reached about $25–26 per SF in mid-2025, roughly +8–9% higher than three years prior. Cumulatively since 2020, MOB asking rents are up ~6.5%, whereas conventional office rents eked out less than 1% total growth in that time. Many markets are seeing all-time high rents for well-located medical space. For instance, newly built medical offices on hospital campuses or in affluent suburbs can command premium rates, lifting metro averages. Landlords report that healthcare tenants are willing to pay moderate rent increases (often with 2–3% annual escalations baked into leases) because their own revenues are growing and location is mission-critical. Unlike a corporate office user, a clinic can often absorb rent hikes as patient volumes and reimbursement rates rise. This has enabled consistent NOI growth in the sector. Even in late 2023 when broader CRE rent growth slowed, medical office rents ticked up again, demonstrating persistent upward momentum. Given tight vacancies and limited new supply, rent growth in the healthcare real estate sector is expected to remain positive in 2026 (forecast in the low single-digit percentages annually).


Stable cap rates reflect lower risk. Investment pricing further evidences the durability of medical office demand. Average cap rates for MOB assets have risen only modestly (to roughly 6.5–7.0% in 2024–25) and even began compressing again in early 2025. This is in stark contrast to traditional offices, where cap rates blew out into the 8–10%+ range amid value uncertainty. The 50+ bps cap rate spread in favor of medical offices reached record levels in 2024. Investors and lenders are effectively assigning a lower risk premium to medical office cash flows – a reflection of the strong occupancy, tenant credit, and recession-resistant demand. In practice, prime medical assets (e.g. buildings leased long-term to top-tier health systems or large physician groups) often trade at mid-6% cap rates, whereas even the best traditional offices struggle to sell below 7–8%. This pricing stability bodes well for refinancing and liquidity in the medical office sector going forward, and it signals that capital will continue to be drawn to the space in 2026.


Regional Demand Trends: Sunbelt Growth vs. Mature Markets


While the overall outlook for medical office is upbeat, regional performance varies across the U.S. High-growth Sunbelt markets are experiencing the most expansion in supply and demand, whereas many Northeast and Midwest markets are steadier and more supply-constrained. Table 1 highlights key demand metrics for select major metros, illustrating these regional differences in occupancy, absorption, rents, and construction:


Table 1: Key Medical Office Metrics by Select Metro (Q2 2025)

Metro Area

Occupancy Rate (Q2 2025)

Trailing 12-mo Net Absorption (SF)

Avg. NNN Rent ($/SF)

Under Construction (SF)

Dallas–Fort Worth (TX)

90.8% (vacancy 9.2%)

+436,755 SF

$24.49

1,151,560 SF

Phoenix (AZ)

89.3% (vacancy 10.7%)

+91,712 SF

$26.03

307,250 SF

Orlando (FL)

93.8% (vacancy 6.2%)

+253,285 SF

$23.41

156,568 SF

Philadelphia (PA)

94.3% (vacancy 5.7%)

–81,836 SF

$19.60

172,990 SF

Detroit (MI)

89.7% (vacancy 10.3%)

+294,041 SF

$19.33

32,485 SF

Sources: Loan Analytic Database


As shown above, Sunbelt markets (e.g. Texas, Arizona, Florida) tend to have slightly lower occupancy rates at the moment (high-80s% to ~91%) owing to a surge of new development, but they also report some of the largest absorption gains. Dallas–Fort Worth, for example, absorbed over 435,000 SF in the past year – one of the highest totals in the nation – as new outpatient facilities opened to serve its fast-growing population. This pushed DFW’s vacancy to ~9.2%, above the national average, but the new space is quickly leasing up. Houston and San Antonio tell a similar story in Texas: both have double-digit vacancy (~10–11%) after a wave of deliveries, yet each also ranked among the top U.S. markets for net absorption in 2025. Developers are actively adding supply in the Sunbelt – for instance, Houston had ~1.2 million SF under construction mid-2025, the third-highest in the country – but much of this space is pre-leased and reflects confidence in ongoing demand growth.


In contrast, many mature markets in the Northeast and Midwest exhibit very tight vacancies and slower expansion. Philadelphia and New York City, for example, are both over 94% occupied on average. New York’s medical office vacancy is around just 5.9%, and Philly’s 5.7%, thanks to limited new construction and steady usage. These markets have older healthcare infrastructure and stricter development constraints, resulting in little new supply and stable tenant bases. Net absorption in some of these mature metros has been flat or even slightly negative in recent quarters (as seen in Philadelphia’s modest –81,000 SF figure in Table 1), not due to lack of demand, but because there is scarce available space to grow into and a few consolidations of older space occurred. In markets like Boston, Baltimore, and Chicago, vacancy rates generally range from 5–8% and have mostly plateaued near historic lows. Rental rates in coastal gateway cities (New York, Boston, San Francisco) are among the highest in the nation – often $40–$50/SF NNN for prime space – reflecting strong tenant covenants and high construction costs. By contrast, many interior markets (Midwest/South) have rents in the high-teens to mid-$20s per SF, offering value upside as healthcare providers expand in those regions.


High-growth regions vs. slower-growth regions: A clear pattern is that Sunbelt and “Smile” states (Southeast and Southwest) are capturing outsized shares of new medical office development. Florida, Texas, Arizona, the Carolinas, and Tennessee are benefitting from population inflows and provider expansions. For example, Florida’s easing of certificate-of-need laws spurred a boom in outpatient construction in the late 2010s and early 2020s. Many Florida metros (Tampa, Orlando, Miami) now enjoy high occupancies (>93%) alongside new projects, as health systems race to establish outpatient clinics in growing suburban markets. In the Carolinas and Georgia, major health systems like Atrium and Novant are continually adding facilities in fast-growing suburbs, keeping vacancy low despite new supply. Conversely, older metro areas with stagnant populations (parts of the Northeast/Midwest) see far less new construction and sometimes slightly elevated vacancies in certain submarkets. Washington D.C. and suburban Maryland, for instance, currently have among the highest MOB vacancy rates (~12%+), due to a combination of new deliveries and some hospital system consolidations. Detroit also has around 10% vacancy, though notably it absorbed nearly 300,000 SF in the last year as its healthcare sector stabilizes. On the whole, even the lagging markets for medical office are doing relatively well compared to general offices – e.g. Detroit’s 10.3% vacancy for medical space is a **fraction of the ~20%+ vacancy seen in its traditional office market – and is trending downward as health providers backfill space.


Outlook by region: In 2026, expect Sunbelt markets to continue leading in net absorption and development. Their vacancy rates should gradually tighten as new facilities lease up and patient demand follows population growth. Markets like Dallas, Houston, Phoenix, Atlanta, and South Florida are forecast to see above-average leasing velocity as new hospitals and clinics come online. Meanwhile, the Northeast and Midwest should maintain high occupancy with minimal new supply, essentially in a landlord’s market. Some slower-growth areas may see flat absorption simply due to lack of inventory to occupy. Investors targeting medical office may find more acquisition opportunities in Sunbelt markets (given more new product and some owners pruning portfolios) whereas in core coastal markets, assets will remain tightly held and priced at a premium due to their stable cash flows.


Limited Supply Pipeline Underpins Stability


A key reason medical office fundamentals are so durable is the disciplined supply pipeline. Unlike standard offices (which were overbuilt in many cities pre-2020), medical office development has always been more measured. MOB construction activity hit a cyclical low in 2025, with only about 33.5 million SF under construction nationwide – a small pipeline relative to the 1.6 billion SF existing inventory. Developers pulled back on speculative projects in recent years as construction costs spiked, requiring very high rents to justify new builds. Many projects were paused or canceled unless they had strong pre-leasing. As a result, MOB completions have been running modest (roughly 15–20 million SF delivered annually) and even trailed behind absorption, tightening vacancies. In 2024, for example, ~19.2 million SF of medical office space was completed (trailing 12 months as of Q2 2025), down from 22.4 million SF the prior year. Net new additions in 2025 are projected to be similarly modest, especially after accounting for occasional demolitions or conversions of older medical buildings.


High pre-leasing and strategic builds: Crucially, much of the medical office space that is being built comes with committed tenants. Developers often require pre-leases from health systems or large group practices before breaking ground. According to CBRE data, 88%+ of MOB projects underway are pre-leased by the time of delivery, ensuring that new supply doesn’t sit vacant. Many new facilities are built adjacent to hospitals (on-campus) or in fast-growing suburbs where a healthcare provider has identified need. Notably, only ~19% of medical office projects under construction are on hospital campuses, but those on-campus projects account for 40% of the square footage being built – they tend to be larger specialty centers. Off-campus developments are typically smaller outpatient clinics (~25,000 SF on average) targeting residential growth areas. This pipeline composition means new space is delivered into areas of pent-up demand, and it leases up rapidly. In fact, analysts project that the total occupied medical office stock will hit a record high in the next year as current projects reach completion and are absorbed.


Sunbelt leads new development: Geographically, the Sunbelt metros dominate the construction pipeline – which correlates with their higher current vacancy noted earlier. Texas markets (Houston, Dallas, Austin, San Antonio) together have several million SF underway, often ranking in the top 5 for construction activity. Likewise, areas like Phoenix, Orlando, and Southern California have sizable projects in progress. This new supply is addressing capacity needs from years of population influx. In contrast, many Northern markets have little to no new MOB construction (often zero SF underway in places like Baltimore, Cleveland, or St. Louis as of 2025). Regulatory factors (e.g. certificate of need laws in some states) and fewer development sites near hospitals keep construction limited in those regions. The controlled pace of development is a positive for the sector as a whole – preventing oversupply. Even in the Sunbelt, the pipeline is modest relative to demand, and projects are phased. Industry forecasts for 2026–2027 show annual new deliveries likely to remain in the 15–20 million SF range, which is easily absorbed given current healthcare growth rates. Indeed, in markets that need more modern clinical space, the introduction of new state-of-the-art buildings is welcomed by providers and often sparks higher rents rather than softening the market. In sum, supply and demand in the medical office sector are expected to stay in healthy balance through 2026.


Rising construction starts: After the trough in 2024–early 2025, there are early signs that MOB development may be ticking up slightly. In Q2 2025, groundbreakings on medical office projects jumped to about 5.8 million SF nationally – the highest quarterly starts in three years. This suggests renewed confidence by developers (likely due to sustained pre-leasing and an improving financing climate as interest rates stabilize). However, even with a mild uptick, the pipeline is nowhere near a threat to the sector’s equilibrium. By comparison, traditional office construction has virtually collapsed to record lows, with almost no speculative offices being built. Interestingly, a significant share of whatever office construction does proceed is actually medical office or life science space – reflecting developers’ pivot to property types with real demand. Roughly 13% of all “office” space under construction in mid-2025 was medical office (and another ~17% lab space), while pure multi-tenant general office comprised only one-third of the pipeline. This trend reinforces that healthcare is a favored growth area for development, and it further insulates the MOB sector: new supply coming to market is largely purpose-built for health tenants who are waiting to occupy, rather than speculative buildings adding competitive vacancy. Overall, the limited and strategic supply pipeline is a cornerstone of medical office durability – ensuring that demand growth translates to higher occupancy and rent, instead of being undermined by overbuilding.


Telehealth and Hybrid Care Models: Impact on Space Utilization


The rise of telehealth is a notable trend influencing how medical office space is used, though its long-term impact appears to be one of adaptation rather than substitution. During the pandemic, telemedicine adoption accelerated dramatically across many specialties. For example, in behavioral health, virtual visits jumped from under 1% of visits pre-2020 to over 32% of all mental health visits by 2022. Even as in-person care resumed, telehealth has remained a significant component of outpatient care delivery in 2025, especially for consultative services like psychiatry, therapy, routine check-ins, and certain follow-ups. This permanent shift to hybrid care is prompting healthcare providers and landlords to rethink space design and requirements.


Reduced foot traffic for certain specialties: Many practices report fewer patients in the waiting room on a typical day, as a portion of consultations happen remotely. In fields like primary care, psychiatry, counseling, endocrinology, and dermatology, a meaningful share of appointments can be done via video or phone. Consequently, some providers are downsizing their physical office footprints or repurposing areas. Large waiting rooms or numerous exam rooms may no longer be needed for clinics that have successfully offloaded routine visits to telehealth. Independent physician groups, in particular, have looked to reduce overhead by leasing smaller suites or negotiating more flexible terms that account for lower daily in-person volumes. For landlords, this means smaller space requirements for certain tenants and a need to accommodate more flexible layouts.


Hybrid office design: Rather than eliminating the need for offices, telehealth is changing how space is configured. Modern medical offices are now often designed with a mix of traditional exam rooms and dedicated telehealth rooms. These telehealth rooms are typically small, private, tech-enabled spaces where physicians or nurse practitioners can conduct video consultations in between seeing patients in person. Clinics are installing high-quality cameras, screens, and soundproofing in these rooms to facilitate seamless virtual visits. Additionally, administrative areas are being equipped for staff to handle telehealth workflow (monitoring virtual waiting rooms, tech support for patients, etc.). Some providers are implementing “hoteling” concepts where certain consult offices are shared or scheduled for use during blocks of telehealth appointments, maximizing efficient use of space. The overall trend is toward flexible, tech-ready medical offices that can support a blend of virtual and in-person care under one roof.


Specialty-specific impacts: The impact of telehealth varies by specialty. Behavioral health clinics arguably feel it the most – many therapy and psychiatry practices have shifted a large share of sessions online. These practices might require fewer exam rooms and could consider co-working or clinic sharing models for the days they see patients face-to-face. On the other hand, specialties like imaging centers, surgery centers, urgent care, dialysis, and physical therapy cannot deliver core services remotely. Demand for space in those fields remains unchanged or even higher as patient volumes grow. In fact, telehealth can increase referrals to in-person care in some cases (e.g. a virtual primary care visit that results in an in-person lab test or specialist referral). Notably, hybrid models are emerging – for instance, a patient might have an initial consult via telehealth but then come in for a procedure. So providers still require exam rooms and procedure rooms; they might just use them more efficiently. Tele-behavioral health might reduce the need for as many on-site counseling offices at once, but many clinics are repurposing freed space for group therapy sessions or ancillary services when patients do come in.


Landlord and investor perspective: For owners of medical office buildings, telehealth presents both challenges and opportunities. Challenges include the risk that some tenants will seek to shrink their space at renewal, or delay expansions, since part of their patient load is managed virtually. This could put slight upward pressure on vacancy in buildings with older designs or larger suites that no longer match tenant needs. Indeed, some landlords in 2024–2025 observed small increases in availabilities as solo practitioners merged or downsized post-pandemic. However, progressive landlords are turning telehealth into an opportunity by marketing properties as telehealth-friendly. This includes ensuring excellent broadband infrastructure, creating smaller turnkey suites outfitted for virtual care, and offering flexible lease arrangements. Owners that can accommodate modern hybrid practices – for example, by subdividing a unit into a mix of exam rooms and telehealth offices, or providing shared telehealth conference facilities – will have a competitive edge in attracting tenants. Furthermore, new development is already integrating design elements like “Zoom rooms” for doctors and enhanced air filtration and spacing to reassure patients for in-person visits.


Net impact on demand: Importantly, telehealth has not eliminated the need for physical medical space – it has shifted it. Many providers use telehealth to expand their reach (serving rural patients or adding evening consults) rather than to cut back their clinics. In fact, telehealth can generate new patient volume that ultimately still uses clinic space (via follow-up procedures, lab work, etc.). The American Hospital Association notes that telehealth is now routine and complements in-person care, and that virtual care still entails costs including the office space from which clinicians deliver telehealth. In other words, doctors often conduct telehealth sessions from their medical office (rather than from home) to maintain professionalism and access medical records or equipment, which means their office is still in use even if patients aren’t physically there. Going forward, the consensus is that hybrid care will be the norm, with perhaps 10–20% of ambulatory visits remaining virtual across many specialties. This suggests medical office demand will remain highly durable – clinics might get slightly leaner in layout, but the savings are limited and often offset by rising overall patient numbers. Behavioral health and telemedicine-only startups could introduce new tenancy models (such as shared suites or rotating schedules), but these are niche. Overall, telehealth is driving innovation in how space is utilized, not a decline in the aggregate need for bricks-and-mortar healthcare facilities. The stability of occupancy in 2025 despite widespread telehealth usage attests to this balance.


2026 Outlook and Forecast for Medical Office CRE


All signs point to continued outperformance of medical office CRE in 2026. The sector’s defensive characteristics – high occupancy, strong tenant credit, and essential demand – position it to weather economic uncertainty and capitalize on growth trends. Here are key components of the 2026 forecast for medical office real estate:

  • Occupancy and absorption: Expect national medical office vacancy to remain in the high single digits (around 7–8%), meaning occupancy in the 92–93% range on average. Even if a mild recession emerges or telehealth usage inches up, healthcare service demand should keep clinics full. In fact, medical office demand is projected to grow in 2026, with net absorption likely in the high single-digit millions of SF again (potentially 8–12 million SF nationally for the year). Aging baby boomers will drive more visits, and providers are hiring: healthcare employment growth (~3% annually) is outpacing overall job growth, translating directly to more space needs. Some high-supply markets (Texas, Arizona) might see vacancy tick down as new buildings lease up, while supply-constrained markets will stay effectively full. Overall, stable-to-improving occupancy is anticipated in 2026, a rare feat in the broader office world.

  • Rent growth and leasing: Healthcare leasing activity should remain solid. Medical tenants historically have high renewal rates, and that trend will continue – we anticipate lease renewals and extensions will remain near 90%+ for expiring MOB leases, given the stickiness of location. New leasing will be driven by expansion of outpatient services (e.g. new specialty clinics, diagnostic centers, ambulatory surgery centers opening). Sunbelt regions will account for a disproportionate share of new leases signed due to their population gains. With tight market conditions, landlords are expected to negotiate annual rent escalations around 2-3% in most new leases (if not higher in inflationary periods). We project asking rents to climb modestly (on the order of 2% year-over-year nationally) in 2026. High-demand submarkets – for example, around major hospital campuses or in affluent suburban corridors – could see even stronger rent growth (3–5%) as health systems compete for prime sites. Given virtually no oversupply on the horizon, rent concessions should stay limited; tenant improvement packages and free rent are far less generous in MOB deals than in regular office deals, due to consistent tenant demand and lower turnover.

  • Investor and lender interest: We anticipate increased capital flow into medical office assets in 2026. With the Federal Reserve likely easing interest rates, financing conditions for acquisitions and development are improving. Lenders are particularly comfortable with medical office fundamentals – many cite strong occupancy and investment-grade health system leases as reducing risk. As a result, debt for stabilized MOB properties should become more accessible and slightly cheaper, which could boost transaction volumes. Indeed, there are early signs of this: after a slower first half of 2025, portfolio sales of MOBs picked up later in the year. Cap rates for medical office may compress marginally if competition heats up; we could see average cap rates drift back into the mid-6% range for quality assets (from ~7.0% in 2024). Investors ranging from healthcare REITs to private equity and family offices are all targeting medical office for its reliable income. Many institutions view MOBs as a core defensive holding akin to multifamily or grocery-anchored retail, which supports sustained demand in the investment market. We expect further cap rate stability or slight compression in 2026, especially for medical offices with long-term leases to credit tenants (hospital-affiliated clinics, large provider groups).

  • Emerging trends to watch: Telehealth integration will continue to evolve – investors might start assessing buildings on their digital infrastructure and adaptability for hybrid care. Additionally, behavioral health facilities and specialty clinics (like dialysis centers, imaging centers) are growth niches that could drive leasing in otherwise slow markets. Life science adjacency is another trend: some medical office buildings are incorporating lab or research components, blurring lines with biotech real estate. While outside the pure scope of MOB, this can attract higher rents and new tenant types. Lastly, policy changes (like Medicare reimbursement shifts or the 2025 “One Big, Beautiful Bill” healthcare legislation) bear watching. For instance, cuts to Medicaid or ACA rollbacks could stress certain rural or safety-net healthcare tenants, but might simultaneously encourage health systems to invest in more cost-effective outpatient clinics. On balance, no major policy shocks are expected to derail the sector in 2026, but savvy investors will monitor these developments in specific locales.


Conclusion


The medical office sector enters 2026 as one of the most durable and attractive areas of commercial real estate. Its combination of steady occupancy, solid rent growth, and resistance to economic volatility underscores why it is considered a “core defensive asset” for CRE portfolios. High-growth regions will deliver new investment opportunities as outpatient networks expand, while established markets offer rock-solid fundamentals and income stability. From a lender’s perspective, medical offices provide strong collateral with low default risk – underpinned by tenants whose businesses (caring for patients) are essential in any environment. And from an investor’s standpoint, healthcare real estate trends offer both defensive reliability and a growth story, a rare combination. Barring unforeseen disruptions, 2026 should be a year where medical office demand remains durable and perhaps even accelerates, further cementing the sector’s reputation as a safe harbor in the CRE landscape. Medical office CRE is set to outperform, driven by the simple truth that healthcare is a necessity – and the buildings that facilitate it will continue to be in high demand.


Sources:

  • Loan Analytic Database

  • CBRE Research – U.S. Medical Office & Healthcare Real Estate Outlook (2024–2025)

  • RevistaMed – Medical Office Market Reports and National MOB Metrics

  • Transwestern – U.S. Medical Office Market Insights & Regional Dashboards

  • American Hospital Association (AHA) – Outpatient care trends and telehealth utilization

  • U.S. Census Bureau – Population growth and aging demographics

  • Bureau of Labor Statistics (BLS) – Healthcare employment and wage trends

  • Centers for Medicare & Medicaid Services (CMS) – Telehealth policy and utilization data

 
 
 

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