The medical office building (MOB) sector opened 2026 with rising momentum as capital markets conditions improved, lenders showed greater appetite for the asset class and operating fundamentals held firm. According to Cushman & Wakefield’s MOB Capital Markets Mid-Year 2026 Update, capital is increasingly targeting healthcare real estate, supported by demographic demand drivers and a track record of consistent, long-term performance.
Investment activity strengthened in the first half of 2026, with MOB transaction volume reaching $6.7 billion, a 21% increase from the same period a year earlier. Even as the number of transactions declined by 15%, the average deal size climbed to $20 million. Cushman & Wakefield noted that this shift in deal profile reflects sustained investor interest in larger, institutional-quality properties and portfolios.
Pricing trends also supported the sector’s momentum. The report highlighted cap-rate compression, signaling firmer asset values and more intense competition for available product. Investors continue to be drawn to MOBs by steady rent growth, a constrained supply pipeline and high occupancy levels. Rents rose 2% year over year, although the report indicated that inflation has begun to outpace rent growth, pressuring real returns if income does not continue to accelerate.
On the debt side, capital availability for MOB assets improved meaningfully. Loan origination volume rose 88% year over year, reflecting both stronger investment demand and higher transaction throughput. Banks have remained the primary funding source for MOB loans, accounting for nearly three-quarters of originations over the past five years. Fixed borrowing costs were reported to be 80 basis points below their 2023 peak, while lenders have become more willing to accept fixed-rate exposure and higher loan-to-value ratios.
Cushman & Wakefield identified several reasons why the sector continues to appeal to lenders, including resilient underlying property performance, stable income returns and positive cash flow characteristics. Income returns have exceeded 5.5% for seven consecutive quarters, and appreciation returns have shifted back into positive territory, reinforcing the sector’s income-plus-appreciation profile.
Looking ahead, the report characterizes the MOB sector as one of the more compelling opportunities within commercial real estate, even as inflation, interest-rate uncertainty and broader macroeconomic risks persist. High occupancy and ongoing rent growth are expected to underpin performance through year-end 2026, while investors remain primarily focused on income durability in their underwriting. With appreciation turning positive, the report suggests that buyer conviction in the sector is likely to keep building.
Cushman & Wakefield also noted caveats to the constructive outlook. Supply-demand conditions will remain a critical factor, particularly as elevated construction costs limit new development and potentially constrain future inventory growth. At the same time, the timing and extent of monetary easing remain unclear amid continued inflation pressures. Even so, the combination of consistent cash flow, expanding capital availability, robust investment demand and an established performance history reinforces MOB’s position as a preferred allocation target for many capital sources.
