The medical office sector has remained stable amidst the ever-changing healthcare landscape, providing a sense of security for investors. According to Marcus & Millichap’s 2H 2023 Medical Office National Report, vacancy rates have stayed consistent and development has slowed due to rising construction costs. This sector was less impacted by the pandemic compared to other areas of healthcare, resulting in steady property fundamentals.
In terms of transaction volume, there has been a decline in activity due to the current interest rate environment affecting deal flow. The average sales price also dropped by 3% from its peak in 2022.
Investors are drawn to this sector because it offers reliable cash flow and favorable lease terms with low turnover rates. Marcus & Millichap analysts highlight that rent gains have consistently increased year-over-year and predict continued success for medical offices as demand for healthcare services remains strong despite challenges posed by labor shortages.
Overall, stability is a key feature of the medical office market that continues to attract investors seeking long-term returns on their investments.
