Medical outpatient buildings are proving to be the breakout performers of commercial real estate, maintaining strong investor appetite and steady growth even as much of the office market continues to struggle. According to Avison Young's U.S. Medical Outpatient Insights for the second half of 2025, the sector's staying power reflects rising healthcare demand, steady occupancy and growing capital inflows from private and institutional investors alike.
Over the past decade, annual collective deal value in medical outpatient buildings has surged from $29 billion in 2016 to $154 billion in 2025, Avison Young reported. Although the number of transactions peaked at 4,821 in 2021, then dropped to 2,803 in 2025, the trend has shifted toward fewer, higher-value deals—a sign of larger portfolio trades and institutional confidence in the asset class.
While the traditional office sector has battled falling demand, MOBs have largely escaped the same fate. From 2023 to 2025, deliveries in the general office sector declined 54.1%, while medical office deliveries slipped only 5.3%. Over the same period, office rents fell 3.4% as MOB rents rose 6.2%. By the end of 2025, traditional office occupancy averaged 80.2%, compared with a healthy 92.3% for MOBs.
Strong fundamentals are also supported by robust growth in healthcare employment. Job postings in medical and social assistance fields more than doubled from mid-2020 to mid-2025, from 88,630 to 205,437—reflecting the need for specialized staff to support hospitals, clinics, senior housing and medical office expansions. To attract talent, salaries have climbed sharply, with healthcare and social assistance accounting for nearly all private-sector job growth in 2025.
Among major U.S. metros, New York City leads with 77.3 million square feet of existing MOB inventory and 739,605 square feet of net absorption in the second half of 2025. Los Angeles and Chicago followed, with 60.7 million and 47.5 million square feet of inventory, respectively.
Markets such as Boston and Philadelphia experienced modest negative absorption, but overall national demand remained strong.
Cap rates continued to compress, falling from 7.47% at the end of 2024 to 6.49% by year-end 2025—another indicator of investor competition. Private buyers accounted for more than half of all MOB acquisitions in 2025 at 51.1%, followed by listed REITs at 26.3%, institutional buyers at 9% and user or owner-occupiers at just over 2%.
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