RevistaMed

The MOB Scene

While MOB Rent Levels are Strongest in Coastal Markets, Rent Growth is Fastest Elsewhere

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For healthcare tenants in costal markets such as Los Angeles, San Jose or San Francisco, it is understood that higher rent levels come with the territory.  Historically hard to build, high demand markets on the coasts have allowed rent levels to build over the years.  In fact, the 2 most expensive rent markets (of the top 50 metros) for MOBs in 3Q23 are San Jose ($45.81 avg NNN rent) and San Francisco ($41.00 avg NNN rent). 

Read moreWhile MOB Rent Levels are Strongest in Coastal Markets, Rent Growth is Fastest Elsewhere

MOB Fundamentals Remain Steady

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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.

Read moreMOB Fundamentals Remain Steady

Demand for Outpatient Space Growing Faster than Supply

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It is no secret that many healthcare services and procedures are increasingly moving towards an outpatient setting. Advances in technology, cost efficiencies and other factors have enabled this move which has led to consistent and steady growth of demand for outpatient space, and the underlying supply of such space. Revista normally tracks the supply/demand picture through its reporting of absorption, completions and occupancy rates.

Read moreDemand for Outpatient Space Growing Faster than Supply

MOBs Located on a Hospital Campus vs. MOBs Close to a Hospital Campus. Is there a Difference?

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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?

Read moreMOBs Located on a Hospital Campus vs. MOBs Close to a Hospital Campus. Is there a Difference?