# **Medical Office Building Sector Expands Amid Outpatient Care Shift**
JLL’s recently released *2025 Medical Outpatient Building Perspective* highlights five key themes that will drive growth in the medical office building (MOB) sector.
### **Outpatient Shift**
Health systems and corporate medical groups continue to prioritize outpatient settings to complement their inpatient strategies. The report emphasizes that “finding the right location to serve patients and grow market share is a top priority.”
### **Rising Demand and Limited Construction**
Demand for MOBs remains strong, driven by health systems, corporate medical groups, and independent providers. However, supply is constrained due to rising construction costs, increased borrowing expenses, and fluctuating capital markets.
“With limited availability and few new developments on the horizon, healthcare tenants—especially those offering low to mid-acuity services—are increasingly considering office and retail spaces near their target patient population or hospital campuses,” the report notes.
### **Growing NOI**
Although rent growth saw a slight year-over-year decline in 2024, premium MOB spaces have experienced stronger growth compared to mid- and lower-tier properties. Many tenants are opting to renew existing leases, with new lease terms averaging 107 months. According to JLL, this trend ensures “steady increases locked in” for investors. Meanwhile, rising tenant cost pressures suggest that “same-store MOB rent growth will remain steady.”
### **Investor Stability**
The report highlights that MOB tenant stability and high renewal rates make these properties a highly attractive asset class for investors. Health systems and providers currently own nearly 50% of the 1.4 billion square feet of medical outpatient spaces.
Additionally, in 2025, investors are expected to explore opportunities to repurpose existing office spaces for medical use, adding significant value to their portfolios.
### **The Forecast**
Looking ahead to 2025 and beyond, several factors will shape the MOB sector:
– **Growing demand drivers:** An aging population, rising disease prevalence, and the need for healthcare services near expanding populations.
– **Emerging challenges:** Shifts toward home care and telehealth, workforce shortages, and slowed population growth.
– **Policy uncertainty:** Potential shifts in political administration and healthcare regulations could introduce volatility to the sector.
The MOB sector remains a key focus of healthcare real estate, with evolving trends favoring outpatient expansion and investor interest.
