Why You Should Invest in Medical Office Buildings

What is a Medical Office Building?

Often located near hospitals or on hospital campuses, medical office buildings (MOB’s) are a type of commercial real estate building that falls under the office asset class. They differ from traditional offices because of the building requirements needed to satisfy the needs of healthcare facilities with features intended specifically for use by physicians and other healthcare personnel such as waiting, exam and operating rooms. MOB’s are typically built with considerations for superior soundproofing for doctor-patient confidentiality, advanced air ventilation standards and have special requirements around parking and ADA accessibility.

3 Reasons You Should Invest In Medical Office Buildings?

Medical office buildings are seen as a lower risk commercial real estate investment for many reasons.

1. Healthcare is a fundamental human need that will not go away nor diminish. People will continue to need medical attention regardless of their financial situation. The COVID-19 pandemic has shown how resilient the industry is. This is demonstrated by the sector’s robust rental income, which has remained over 95% for the last two years. Most MOB renters were able to pay their rent on time as patients continued to seek treatment despite the economy. While elective treatments could be postponed, those who are unwell or require urgent medical care will still need to visit the hospital whether the stock market is rising or falling.
2. Forecasted increase in demand. Due to the large size of the baby boomer generation individuals over the age of 65 will increase by 73 percent between 2010 and 2030. One in five Americans will be a senior citizen. Easier access to medical care will be critical for the US’s aging population. People tend to visit the hospital more the closer they get to retirement. Senior citizens typically visit a doctor ten times more often than those of a younger age. These increased medical needs create a higher demand for more medical offices building locations specifically close to suburban areas and neighborhoods.
3. History of strong performance. If you take a look at the top 50 MOB markets in the US, transaction volume has grown from $18.2B to $24.5B in the last quarter alone, vacancy rates have fallen 40 basis points in the first half of 2022 to 8% and transaction volume has also increased by 79.2% from 2021, setting yet another record for the sector. Higher prices don’t always mean higher rents and having a trusted investment advisor who is familiar with these markets is important in order to avoid investment deals with weaker cash flows. If you know where to look, medical office properties in specific markets provide a solid tenant mix that will yield long-term value for investors.

Learn More With Sands Investment Group

If you want to invest in medical office buildings, you can trust that Sands Investment Group’s specialized Medical Office Building team will provide top notch advice. We are a commercial real estate brokerage firm specializing in purchasing and selling commercial investment properties for private investors and organizations throughout the United States. Contact us today to learn more about our services.