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MOB tenants pay a premium for these markets

MOB tenants pay a premium for these markets

Jason Muss of Muss Development
Medical office tenants are looking for densely populated markets, said Jason Muss, president of Muss Development.

Demand for medical office buildings continues to grow nationwide. As the population ages and the youngest baby boomers reach their 60s, the need for personal healthcare is becoming increasingly important. However, some markets in the U.S. are experiencing greater demand than others, and as a result, some MOB spaces are selling for the highest prices. In these areas, MOB brokerage is unlikely to decline.

“I think there are many markets in the US with very attractive MOB opportunities, but as with all real estate investments, the ‘hotness’ of the market depends on the observer,” Nathan Riley, director of asset management at BGO, told Commercial real estate manager. “That said, I think an important determination of whether a market has the potential to be attractive is to look at the demographic trends through the lens of a medical professional.”


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And through the lens of someone in the medical field, access to patients and a growing patient base is key. That makes markets like the Sunbelt states particularly attractive, as are cities where people want to age in place, like Miami.

Southern states also offer opportunities. “Many MOBs are looking to open offices in southern states so they can serve snowbird patients in their northern home bases and when they are at their snowbird vacation homes in the south,” said Eric Hoffman, vice president and national head of the healthcare sector at Project Management Advisors.

Medical tenants need people

Places with access to a huge population, like Manhattan, also have a high concentration of MOBs. With easy access via trains, cars and subways, certain parts of the city are short on medical space available to a waiting list of potential tenants, said Jason Muss, president of Muss Development.

“Then there are specialized areas like Boston, Miami and Los Angeles that offer tremendous medical benefits,” Muss continued.

Being a top doctor in a major urban center offers an access advantage and a centrality advantage, which drives up rents. Many medical uses—surgery centers, hospitals, cancer treatment centers, etc.—seek out urban centers before venturing out to the suburbs. For these types of tenants, agents must first study the surrounding population and then understand the real estate needs.