Demand for healthcare space remains structurally strong, underpinned by demographic tailwinds, the continued shift of care delivery to outpatient settings, and health system strategies to expand local networks closer to the patient base. Occupancy levels remain high relative to other property types, and rental growth, while moderate, is consistently positive, driven by limited new supply and stable tenant demand.
Compared with broader office, retail, and industrial markets, healthcare real estate demonstrates greater predictability. General office continues to grapple with elevated vacancies and tenant downsizing, while retail and industrial, though healthy, show more cyclical variability. By contrast, HCRE benefits from sticky tenancy, long lease durations, and credit backed rental streams, making it an increasingly favored defensive allocation for institutional and private investors alike.
Cap Rates
After expanding meaningfully in 2022–2023, cap rates have largely stabilized, with high quality MOBs trading in a narrower band. Core, on campus and health system anchored assets are beginning to see firming pricing, with potential for modest compression if rate cuts materialize in H2 2025.
Transaction Activity
Volumes remain below peak years but have improved from 2023 lows. Investor sentiment is positive, and deal flow is expected to accelerate in the second half of the year.
Buyer/Seller Dynamics
REITs have returned as active participants, alongside private capital and health systems. Sellers are benefiting from deeper buyer pools and improved execution compared with the past 18 months.
Improving Execution
Stabilized rates and tighter credit spreads are narrowing bid ask gaps and enabling cleaner underwriting. Quality, cash flow durable assets (credit tenancy, on campus or hospital adjacent locations, long remaining term, and escalations) command the most attention.
Pricing stratification
Investors continue to pay premiums for (i) on campus or campus adjacent locations, (ii) HOPD/ASC components, (iii) large system or investment grade tenancy, and (iv) strong demographics. Older, non prime assets with capital needs price at wider cap rates.
With over $4 billion in healthcare real estate transactions completed nationwide, HREA’s advisory team brings unmatched execution capabilities and strategic insight to every transaction. Our proprietary marketing platform and competitive process consistently generate above-market valuations, delivering exceptional results for physician-owners across the country.
Surgical Hospital/Outpatient Surgery Center | Webster, TX
Dignity Health Micro-Hospital | Phoenix, AZ MSA
Specialty Surgical Hospital & MOB Portfolio | Shreveport, LA
Physician-Owned Hospital & MOB | Wichita, KS
Physician-Owned Surgical Hospital | Transfer, PA
Surgical Hospital & Outpatient Surgery Center | Corpus Christi, TX
Whether you’re thinking about selling now or you’re planning to in the future, having the right conversations now can help maximize the value of your investment. Our highly knowledgeable team of Healthcare Real Estate Advisors are here to help guide you along the way and answer all your questions
