MOB Construction Outlook
With the cost of construction materials continuing to rise, and interest rate hikes on the horizon, how will new MOB developments be affected?
MOB Construction Projects, Are All Types being Affected Uniformly?
If you have been staying up to date with Revista’s most recent construction data, you know that over the past few quarters, construction has been down across the board. However, the magnitude of the depression may depend on the characteristics of the project.
MOB Construction Update
MOB construction has been slower than usual in 2025. Less projects are breaking ground than are completing, so the pipeline has been shrinking. In recent times, inventory has typically grown around 1.5% annually. Over the past year MOB inventory has grown . . .
MOB Fundamentals Have Remained Strong in 3Q22
An inversion of the yield curve is a well-known indicator of a coming economic downturn. Using the difference between the 10-year and 2-year treasury spread, we can see that the …
MOB Fundamentals Remain Steady
Development and acquisition activity is currently suppressed in the medical office sector. However, this does not reflect a wavering in the underlying performance of medical assets. The graph below is from our 3Q23 Industry Fundamentals Report, which tracks a group of large medical office portfolios containing approximately 150 million square feet. It shows the average NOI per occupied square foot, which has continued to tick up, now at a level of $23.20.
MOB Occupancy Trends Across the Country
If we take a look at the overall occupancy trends for the top 50 metros, we can see that a shallow U-shape has formed over the past few years. While this pattern shows a modest dip followed by a recovery, this may not be the story for individual metros.
MOB Rents by Region
Which regions have the highest rents? According to the following graph, which covers the largest metro areas across the U.S., the Pacific region is the outlier. In 2Q24, the Pacific had asking rents 29% higher . . .
MOB Rents: Does being close to a hospital matter?
Are MOB rents significantly higher when in close proximity to a hospital? To isolate the effect a property’s distance from the nearest hospital has on rent, we looked at a dataset of MOB’s that are not affiliated with a hospital, nor directly on a hospital campus.
MOB Transaction Prices
If you have been following our MOB transaction trends lately, you know that volume has been very high over the past year. In the second quarter of this year, Revista …
MOBs Located on a Hospital Campus vs. MOBs Close to a Hospital Campus. Is there a Difference?
Historically, Revista has categorized medical office buildings (MOBs) into two categories, on a hospital campus or off. However, recently Revista has developed a third category, adjacent. These are the properties that fall within a quarter mile of a hospital campus footprint. Conventional thought suggests that on-campus assets demand a premium, but what about the buildings just outside of a campus?
More MOB Sales in 2026
$16.3 billion in MOBs have traded over the past 12 months. That is the highest level of volume we have recorded since 2Q23. These sales comprised 47 million square feet in MOB buildings, equivalent to 2.9% of . . .
Outpatient & Inpatient Employment Growth
Growth in the healthcare industry has continued to outpace the overall job market and we continue to hear in the BLS monthly job report that healthcare and social assistance is a leading contributor of job growth. The largest gains tend to be on the . . .
Rate Cuts on the Horizon
For all of 2023 investors have been waiting for more clarity on the monetary policy path. The FOMC meeting last week provided what many have been waiting for. The median projection for the federal funds rate is now 4.6 for the end of 2024. This leaves room for three 25 basis point cuts throughout the year. While not shown in the graph below, the full range of forecasts for 2024 is 3.9 – 5.4. This indicates that all the meeting participants are predicting no rate hikes in 2024, which is a first for this year.
Rehab Hospital Projects Maintain Strong Pipeline
Despite economic headwinds, rehabilitation hospitals have seen escalated development over the past couple of years. The chart below focuses on the scope of projects that started construction each year. We …
Revista 3Q24 Subscriber Webinar – Abridged Slides
Last week, Revista held its subscriber webinar for 3Q24. For a limited time, an abridged version of the slide deck will be available as a free resource at the following link . . .
Rising Rents for Newly Built MOBs
How have rising construction costs affected rents? Revista’s construction data continues to show increases in the cost of building an MOB. The average cost per square foot came in at $549 for completed MOBs in 2024. That is a . . .
Sales Activity Across Different Types of Healthcare Real Estate
Medical real estate seems to be in a tide shift when it comes to sales activity. With a second 25-bps cut in the federal funds rate and the announcement of the Remedy/Welltower transaction, we already know 4Q . . .
The Fed’s Expectations for 2023
Last week the Federal Open Market Committee (FOMC) decided to raise the target range for the federal funds rate to 4.25% – 4.5%, which was a 50-bps increase. After several 75-bps bumps...
The Medical Office Sector and GDP Growth
This morning the BEA released its first official estimate of real GDP growth for 2Q2022. It came in at -0.9. The revised official rate from last quarter was -1.6, and depending on the definition used, some would now say that we are in a recession.
Which Counties are Rapidly Increasing Healthcare Output?
Healthcare Gross Domestic Product (HGDP) is measure of the monetary value of healthcare output. In the charts above, we are looking at growth in real HGDP for each county over the past decade. Real HGDP is inflation adjusted to provide a better view on . . .
Which Markets have the Largest Construction Pipeline Relative to Their Size?
Typically, when we report the top construction markets, markets are ranked by the total square footage that is under construction. In the table below we are instead sorting by this number relative to the market size. This highlights some of the smaller markets that have a lot of supply growth in the pipeline. Madison, WI . . .
Which MOB Markets have the Most Concentrated Ownership?
To answer this, we analyzed how MOB square footage is spread across all the owners in each of the top 125 markets. The chart below lists the most concentrated markets, with . . .
Will Cap Rates Continue to Compress?
We have continued to see cap rates compress throughout the first quarter of 2022. The median has gone up slightly, but...
Will MOB Financing Continue to Trend Upwards?
If you have been following medical office sales activity, you know that transaction volume is moving upwards. Another angle for viewing the financial environment is to look at the number of new mortgages. Looking at the mortgage trend . . .