Rent Growth Concentrates in Secondary MOB Markets Amid Tight Supply
Secondary medical outpatient markets are posting a growing performance edge as tight supply conditions and uneven absorption patterns drive localized rent growth, according to Transwestern's Q1 2026 medical outpatient buildings report.
While national medical outpatient rents have remained largely flat over the past four years, rising just 0.1% in Q1, performance across individual markets has diverged sharply. Thirteen markets recorded rent growth above 5% year-over-year, with select metros posting gains above 7%.
That divergence is most visible in growth-oriented secondary markets such as Reno, Salt Lake City and Nashville, which ranked among the strongest performers for annual rent growth. Other Sun Belt and expansion markets, including Atlanta, Austin, Tampa/St. Petersburg, Orange County, Orlando and Raleigh/Durham also continued to post steady gains supported by consistent demand and positive absorption trends.
Underlying that rent performance is sustained demand from healthcare employment growth and the continued expansion of outpatient care. Healthcare accounted for roughly 69% of total U.S. job creation in January, led by ambulatory healthcare services. Plus, medical office-using employment is also forecast to grow by 5.5% in 2026.
At the same time, supply remains structurally constrained across much of the market. Vacancy held steady at 6% nationally, with levels remaining below five-year averages in 20 of 35 tracked markets. Even as construction activity persists in metros such as Dallas, Miami, Phoenix, San Francisco and Los Angeles, more than 88% of space under development is already pre-leased, limiting meaningful near-term vacancy pressures.
This imbalance between demand and available space is contributing to competitive leasing conditions in tighter secondary markets, where limited existing inventory and low development pipelines are sustaining upward pressure on rents. Markets such as San Diego, Seattle, Northern Virginia and Salt Lake City continue to operate below historical vacancy norms, while others, including San Antonio, Washington, D.C., Boston and Suburban Maryland, sit above the trend.
More than 60% of markets tracked recorded positive net absorption over the past 12 months, though only a handful saw outsized gains exceeding 100,000 square feet, including Dallas, Houston, Orange County and Jacksonville. Direct vacancy trends also highlight the tightening dynamic in many secondary markets, with multiple Sun Belt metros posting below-average vacancy levels despite ongoing construction activity.
Source: GlobeSt/ALM