Medical Office Investment Surges Amid Office Sector Slowdown

Medical office investment surges as traditional office slows, with rising rents, strong occupancy, and $154B in 2025 deal volume.

February 28, 2026

Valerija I.

Medical office buildings (MOBs) saw deal value jump from $29B in 2016 to $154B in 2025.
MOB occupancy averaged 92.3% in 2025, far outperforming the 80.2% rate in traditional offices.
Rents for MOBs rose 6.2% in two years, even as general office rents declined 3.4%.
Cap rates for MOBs compressed to 6.49% by year-end 2025, reflecting high investor demand.

Key Takeaways

Medical Office Demand Persists

Globe St reports that medical office buildings are capturing sustained investor interest even as traditional office properties falter. The sector’s resilience is underpinned by strong healthcare demand and persistent high occupancy rates, according to Avison Young’s latest report.

Annual deal value in medical office climbed from $29B in 2016 to $154B in 2025. While total transactions declined since peaking in 2021, larger portfolio trades and institutional capital signal rising confidence in the asset class.

Rising Fundamentals Support Growth

Medical office investment momentum is supported by robust sector fundamentals. From 2023 to 2025, deliveries of new general office space dropped by 54.1%, but medical office deliveries saw only a modest 5.3% drop. During this period, MOB rents grew 6.2% while general office rents slipped 3.4%.

Occupancy remains strong in medical office buildings, reaching 92.3% nationally at the end of 2025. NYC continues to lead the sector with over 77M KSF of inventory and nearly 740 KSF in net absorption in the year’s second half. Chicago’s position among the top three markets also reflects how medical office expansion is helping stabilize and revive portions of its broader commercial real estate landscape. Los Angeles and Chicago round out the top three markets for MOB inventory.

Healthcare, Employment, and Capital Influx

Healthcare job growth is fueling medical office demand. Postings in US medical and social assistance fields more than doubled in five years, reaching over 205,000 by mid-2025. Salaries have risen sharply to secure specialized talent, further bolstering sector stability.

Investor confidence is reflected in falling cap rates—from 7.47% to 6.49% in 2025—and in the dominance of private buyers, who led with 51.1% of acquisitions. Listed REITs and institutional capital are also active, driving competition for assets in major metros and secondary markets alike.

What’s Next

Stable rent growth, high occupancy, and rising healthcare demand continue to drive medical office investment. As a result, many CRE investors now treat the sector as a core allocation.

Strong fundamentals consistently attract new capital. Meanwhile, traditional office properties still face slower leasing and weaker recovery trends.