MOB occupancy at record high, rents rising as inventory tightens, reports commercial real estate firm

Medical office building (MOB) occupancy is at a record high of 92.7% and “institutional investment is increasing, but policy changes and financial pressures are heightening risk for both occupiers and investors,” according to a report from JLL, a professional services firm specializing in commercial real estate.

JLL says the high occupancy and increased investment is largely being fueled by exploding outpatient volume, along with “an aging population and corresponding disease prevalence.” Out of the top 10 growth areas for patient volumes, eight are in outpatient services, the firm claims, as hospitals continue to shift care traditionally performed on an inpatient basis to lower-cost outpatient settings.

The question now is that this migration trend is running out of space to continue growing. According to JLL, new MOB starts fell in 2023 due to higher financing costs, and “hit a trough” in the fourth quarter of 2024 at only 1% of inventory, picking up slightly in the second half of 2025 to 1.1% of inventory. “Speculative development is still limited, and hospital and health systems lead construction starts, occupying a large portion of their new projects leaving limited available inventory,” writes JLL, which says MOBs are becoming “increasingly complex, incorporating imaging, surgery centers, labs and physician offices in the same facility.”

The result of the tight MOB supply is “pricing power for landlords, particularly with tenants in high-margin specialties,” the firm states, adding that “lease structures are trending toward more aggressive escalations.” It reports that “average MOB growth has consistently outperformed office and Class A average rent since 2022, and new construction rents are running at nearly twice [that of] in-place rents.”

More findings from JLL’s report:

• “Health systems accounted for 46% of medical leasing tracked in 2025 with expansion focused on large multispecialty clinics in the 40,000-60,000 square foot range. Specialty providers had the second largest share at 36%.”
• “To expand their footprint and outpatient service lines, hospital systems are using mergers with other health systems, acquiring practice groups and employing physicians. Consolidation by healthcare providers has progressed at a steady pace over the last decade. Private equity roll-ups are also creating consolidation in the industry – health care is fragmented and investors can make practices more efficient through consolidating back-office functions and growing brand recognition.”
• “Well-performing fundamentals including high occupancy and steady rent growth continue to draw investor interest towards the MOB sector.”
• “Institutional groups’ share of MOB purchases in 2025 was larger than any other year this decade.”
• “Improving operating fundamentals, a highly liquid capital markets environment, and increasingly active debt markets are likely to make for stronger transactions volume in 2026. However, policy changes and declines in coverage could significantly affect specific assets and service lines.”

JLL advises health systems and provider groups that “demographic-driven portfolio strategy is essential for revenue growth and stable margins,” and that renewing tenants “need to prepare for significant rent resets as there is a widening gap between in-place and market rents.”

Meanwhile, JLL tells investors that “consolidation means that fewer decision makers will control larger portfolios of outpatient sites, meaning location decisions will be more sophisticated. Policy changes and coverage declines may affect the payor mix and revenue, so asset-level due diligence is key.”