Investors paid an average of 14% more per square foot for an on campus medical office building (compared to an off campus medical office building) in the 3rd quarter of 2014. Revista tracked approximately 100 medical office building (MOB) transactions in the quarter. The average on campus MOB transaction was at $291 per square foot (SF) compared to $256 per SF for an off campus MOB.
The “on campus” premium also held true on a yield basis. Investors earned an average initial yield of 6.19% (12 observations) for an on campus MOB in 3Q14 compared to a 7.14% yield (19 observations) for off campus MOBs.
Notable on campus transactions in the quarter included HCP’s purchase of the Market Street Medical Office Building in Philadelphia, PA. The 435,000 SF on campus MOB sold for just over $138 million. The price works out to $319 per SF and the reported yield was 6.5%. The building is 18 stories and is fully occupied by Children’s Hospital of Philadelphia and University of Pennsylvania Health System.
The Revista 3Q14 National Transactions Report carries offers more details on medical office and other healthcare real estate transactions. The report is available with a premium subscription to Revista, which starts at just $80 per month. Check pricing and details here.