Medical outpatient buildings are drawing fresh attention as an analysis finds they have delivered stronger risk-adjusted performance than the four major commercial property sectors over the past decade. A white paper from Sophie Kim, Vice President of Investments at Rethink Healthcare Real Estate, prepared for Revista’s Rising Leaders Council, concludes that medical outpatient buildings provide the highest return per unit of risk along with relatively shallow peak-to-trough drawdowns.
Rethink’s study relied on NCREIF Property Index data to compare returns, volatility and drawdowns across major property types. The analysis was then supplemented with CBRE vacancy statistics and Green Street net operating income growth data to evaluate the fundamentals supporting this resilience. The work is presented in the paper titled “The Quiet Achiever: MOBs Deliver Superior Risk-Adjusted Returns.”
Using NCREIF data over an 11-year period from the third quarter of 2014 through the third quarter of 2025, the paper reports that medical outpatient buildings posted an annualized total return of about 6.6%, with annual volatility of 4.2%. According to the analysis, that volatility level is significantly below that of traditional core sectors. By comparison, industrial properties generated the highest absolute returns at roughly 12.4%, but with annual volatility of 12.7%, about three times that of medical outpatient buildings.
Kim frames the comparison as two different paths to performance, with industrial benefiting from strong growth phases but also experiencing more pronounced corrections. Medical outpatient buildings, by contrast, are described as having grown more steadily, enabling returns to compound more efficiently over time. When the Sharpe ratio is used to assess excess return relative to volatility in the NCREIF data, medical outpatient buildings are reported to outperform the core sectors.
The paper also finds that medical outpatient buildings generate the highest income return metric cited, at 15.8, versus 6.2 for industrial, 10.4 for apartments, 9.4 for retail and 7.8 for office. Medical outpatient buildings are also said to rank ahead of apartments, retail and office on an appreciation return-to-volatility basis. In terms of downside resilience, medical outpatient buildings and industrial are viewed as closely matched when looking at appreciation returns alone, with medical outpatient buildings showing an estimated peak-to-trough decline of about 13%, slightly above industrial, but well below the 37% for retail, 24% for office and 18% for apartments.
On the public market side, Green Street data on same-store net operating income growth from 2010 to 2024 show medical outpatient buildings with the lowest volatility, at approximately 0.6% annually. Occupancy trends point in the same direction: the standard deviation of vacancy for medical outpatient buildings is reported at 1.3 percentage points, second only to apartments, and quarterly vacancy changes show the greatest stability among property types, with a standard deviation of just 0.16 percentage points. Kim attributes this smooth pattern to long-term tenancy, necessity-driven demand and disciplined development that limits abrupt occupancy swings.
Kim’s conclusion is that medical outpatient buildings are “quiet achievers” within institutional real estate, not dominating headlines but consistently delivering returns with notable stability. The paper emphasizes that both return and risk matter for long-term efficiency, and that the steadiness of medical outpatient building performance is a central part of their investment profile. The publication notes that it is for informational purposes only, is not investment advice and that the underlying data from NCREIF, CBRE and Green Street, while believed to be accurate, are not warranted for completeness or reliability.
