By Cheryl Carron, Contributing Writer

Converging demand drivers, constrained supply and near-term policy changes are creating new opportunities and risks across the medical outpatient building (MOB) sector. As healthcare delivery pivots toward outpatient settings to provide more convenient cost-effective care, four interconnected trends are shaping the different ways that healthcare systems, investors and developers are approaching their growth-minded real estate strategies. 

1. Durable demand drives outpatient service line growth 

Increased demand for medical outpatient space is being driven by an aging U.S. population and a younger, health-conscious demographic, according to JLL’s 2026 Medical Outpatient Building Perspective. 

Even as declines in insurance coverage will cause some patients to forgo care and population growth is uncertain due to changing immigration policies, outpatient volumes are projected to grow significantly faster over the next five years compared to inpatient care. 

Outpatient services are also expected to dominate growth across healthcare specialties. Eight out of the 10 fastest-growing service lines are outpatient, including psychiatry and physical therapy and rehabilitation. And innovations in treatment, including new therapies for diabetes and weight loss, are accelerating growth in specialties such as endocrinology. 

Despite this rising demand, tight operating margins have placed additional pressure on health systems to carefully weigh expansion. Median hospital margins remained steady from 2024 to 2025 at almost 5%, according to the Kaufman Hall Flash Report, but once accounting for system overhead, median margins declined from 2024 to 2025. 

Policy changes are also compounding margin pressure. For example, the One Big Beautiful Bill Act (OBBBA) made significant changes to Medicaid eligibility and funding, while the expiration of enhanced Affordable Care Act subsidies has caused premiums to more than double from 2025 to 2026, according to the Kaiser Family Foundation. In fact, ACA marketplace enrollment already is down 1.4 million people year-over-year per the Centers for Medicare and Medicaid Services (CMS) data released in January. Decreases in coverage typically mean an increase in the uninsured population and an increase in bad debt for hospital systems. 

2. Limited development leads to high occupancy 

Even as outpatient demand and service line expansion is strong, deliveries of new MOB buildings are limited due to rising land and construction costs that make speculative development difficult to justify. 

In the fourth quarter of 2024, new starts for MOBs in the Unite States declined to 15.7 million square feet — 1 percent of inventory — according to JLL and RevistaMed data. Only recently have new starts begun to accelerate, totaling 17.8 million square feet in the fourth quarter of 2025. 

Hospitals, health systems and government entities are responsible for a growing share of construction starts, and those entities often are anchoring new developments to support their own outpatient expansion. 

Related Content: Outpatient Growth and the Future of Healthcare Real Estate

The current constrained supply environment has fueled high MOB occupancy, as well as steady rent growth. Absorption consistently exceeded deliveries in 2025, with occupancy rising to 92.7 percent, which is about 30 basis points higher year over year. While rent growth has moderated from its inflation-driven peak in 2023, it remained healthy at 3.3 percent in the fourth quarter of 2025. 

Investors are taking note of the fact that, since 2022, average MOB rent growth has consistently outperformed office and Class A average rent. New construction rents are nearly double those of in-place rents, and that spread continues to widen. 

3. Consolidation fuels leasing 

Consolidation is accelerating as hospital systems are expanding through mergers and acquisitions with other health systems, acquiring practice groups and employing physicians. Healthcare systems now represent the largest lessor of medical outpatient space, composing 46 percent of 2025 leases tracked by JLL. 

Those shifts are altering the way leasing decisions are being made. This increase in system ownership and size of practice means that real estate decision makers are taking a portfolio-focused approach to opening or relocating offices, examining demographics and aligning with overall strategy. 

Private equity and venture capital also are playing an important role in the outpatient sector. For example, behavioral health-related service lines saw about 10 percent of leasing activity tracked by JLL in 2025, which includes private-equity-owned therapy clinics, eating disorder centers and private practices. These investors are further contributing to industry consolidation. 

4. Investor demand brings deeper scrutiny 

Well-performing fundamentals, including high occupancy and steady rent growth, continue to draw investor interest toward the MOB sector. Transaction volume accelerated in the fourth quarter of 2025, driven by Welltower’s $7.2 billion portfolio disposition to Remedy Medical Properties and Kayne Anderson. 

While large-scale, mergers and acquisitions-driven activity was more limited than in 2024, the volume of single-asset and smaller portfolio transactions remained consistent with prior-year levels, indicating stable underlying market liquidity. 

Pricing challenges still persist, as capital availability exceeds the supply of assets that fit investor parameters. Because of this challenge, investors are placing greater emphasis on asset-level diligence. Key considerations are focused on health system financials, revenue mix and the impact of reimbursement policy changes. Micro location and payor mix directly affect cash flow stability and valuations. 

Properties with high-margin specialty services, like ambulatory surgical centers or assets with tenants that provide advanced imaging, continue to command premium pricing due to their contributions to net operating income. Collectively, these factors are sustaining a competitive, robust pricing environment for the MOB sector. 

Strong fundamentals, liquid capital point to active 2026 

The MOB sector is positioned for a healthy and active 2026, supported by improving operating fundamentals and a highly liquid capital markets environment. Investors are increasingly bullish on rent growth, driven by a notable gap between new developments leasing at more than $40 per square foot and average in-place rents leasing in the mid-$20s per square foot, according to the JLL report. 

Debt markets for medical outpatient assets also have been highly competitive, with lenders active across all major lender types, as evidenced by credit spreads tightening by 30-40 basis points since 2024 and an acceleration of transaction activity in the fourth quarter of 2025. 

Continued rent growth, limited new supply and strong liquidity in the debt markets are expected to drive further transactions activity and support additional cap rate compression. 

For occupiers, portfolio strategy is key. Site selection and expansion decisions must balance patient demand with provider availability, payor mix and insurance coverage trends. For investors, underwriting must account for real estate fundamentals, as well as healthcare-specific risks. 

In this environment, success will depend on the ability to navigate the opportunities, as well as the risks that can affect payor mix and revenue at the asset level across select markets, properties and service lines. 

Cheryl Carron is chief operating officer of work dynamics Americas and president of the healthcare division of JLL.