Sales of medical outpatient buildings have slumped to their lowest level in a decade, even as rents, pricing, and loan performance look exceptionally strong. Market participants point to a mix of political and economic disruption, higher interest rates, and limited buyer capacity, rather than weakening fundamentals, to explain the disconnect, suggesting that capital is cautious rather than abandoning the sector.
Why Deals Are So Scarce
“The slowdown in medical office building transactions in 2025 was largely a product of the political and economic disruption in the first half of the year, which created enough uncertainty to pause new investment,” says Jim Kornick, principal and co-leader of U.S. Healthcare Capital Markets at Avison Young. He adds that the market is still working through what the last few years mean for values and risk over the next three to five years, and that uncertainty is keeping some investors from moving aggressively even when they like the underlying story.
REITs have also stepped back. “I think the REITs have been selective on the sidelines or disposing medical buildings for the last 12 to 18 months,” Andrew Saba, managing director of Stockdale Capital Partners, told GlobeSt.com, noting that many newly formed joint ventures are not large enough to take down large portfolios. With interest rates higher, he says there have been fewer portfolio transactions, even as he emphasizes that the best assets are “holding up in pricing.”
Sean Maynard, co-lead of the healthcare real estate team at Brown Gibbons Lang & Company, describes an environment where “deals are getting done at a much higher clip than in the last few years, but it’s still not an easy fluid environment.” What would have been an “easy slam dunk” two or three years ago, he says, is now more difficult, underscoring how the bar for closing transactions has risen even as investor interest remains. Farrell Fritz Partner Michael Webb tells GlobeSt.com that he has already seen increased CRE activity during and after Q3 and is watching to see what final Q4 numbers show, adding that further Fed interest rate cuts could pull more capital off the sidelines.
Against that backdrop, sales volume during the first three quarters of 2025 was reportedly the lowest in ten years, according to data from RevistaMed. A first-half report from Brown Gibbons Lang & Company put the drop in sales volume across the first and second quarters at 19% compared with the prior year, a figure Cushman & Wakefield also cited. Those results reinforce the picture of an asset class that investors still covet but are trading far less frequently than earlier in the cycle.
Pricing, Rents And Loan Performance
Even as transaction counts fall, capital that does trade is paying up for quality. MOB investment in the third quarter reached $2.7 billion, a 27% increase from the prior quarter, bringing the trailing-four-quarter total to $9.4 billion when a strong fourth quarter of 2024 is included, according to CBRE. The average sales price was $298 per square foot, which CBRE reports is 51% higher than the $197 per square foot being achieved by traditional office buildings.
Debt performance underscores the sector’s resilience. Medical office loans have produced steady returns and rising revenues, and the delinquency rate for CMBS loans backed by medical office properties has been 6.15% compared with 11.31% for conventional office loans, according to Trepp data cited by GlobeSt.com. That spread highlights why lenders and bond investors continue to view medical office as a relatively safe harbor within the broader office universe.
Underlying Demand Remains Firm
Leasing metrics also point to healthy fundamentals. Average asking rents for medical outpatient buildings reached a record-high $25.20 per square foot in the third quarter, up 0.5% year-over-year, according to CBRE’s figures report. The quarter posted 624,000 square feet of positive net absorption, marking the second consecutive period of positive demand and reinforcing that tenants are still expanding in the space.
Taken together, the interviews and data suggest a market caught between strong, durable demand and a capital stack that is still recalibrating to higher rates and recent volatility. Investors, lenders, and advisors broadly agree that while 2025 transaction volumes have been surprisingly thin, the sector’s pricing power, rent growth, and loan performance continue to justify its favored status among defensive real estate plays.
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