Long-Term Demand Keeps Medical Office on Solid Ground
Despite economic crosscurrents, medical office real estate continues to show exceptional resilience, according to industry leaders at this year’s GlobeSt.com Healthcare conference. Panelists emphasized that sector fundamentals remain stable, demand remains entrenched, and healthcare systems are increasingly committed to long-term occupancy.
Moderator John Chang, SVP of Marcus & Millichap, led a discussion with experts from CBRE, MedProperties Realty Advisors, First Citizens Bank, Newmark, and Capital One.
“The fundamentals remain strong,” said Darryl Freling of MedProperties. He noted that occupancy across medical office assets remains robust, underpinned by durable demand drivers tied to demographic trends and the essential nature of outpatient care. Even as tenants face pressures—from disappearing Affordable Care Act subsidies to rising operating costs—Freling said these challenges more often reinforce stability: “If they’re under operational cost pressure, you have high confidence they will renew.”
CBRE vice chair Chris Bodnar agreed, calling medical office “the steady Eddy of commercial real estate,” consistently delivering year-over-year rent growth even as other asset classes soften.
From the occupier side, Kyle Arnold of Newmark described a “stay-put environment,” driven not by lack of interest in expansion but by rising construction and operational costs. Steven Reedy of First Citizens Bank added that replacement costs for facilities have pushed tenants toward renewed leases and longer commitments.
The consensus: medical office is positioned to outperform through 2025, powered by strong user demand, stable rent growth, and systems increasingly focused on long-term strategic real estate decisions.
Check back with GlobeSt.com for more coverage from the State of the Market panel and from the Healthcare conference.
Healthcare Real Estate Holds Steady Amid Economic Crosswinds
Source: GlobeSt/ALM