Medical outpatient buildings ready for active 2026 despite policy headwinds

CHICAGO, March 24, 2026 - Strong demographic trends, consolidations, limited new supply and increased investor interest despite pricing challenges and policy risks are driving robust performance in the medical outpatient building (MOB) sector, positioning it for continued growth despite emerging policy challenges, according to JLL's new 2026 Medical Outpatient Building Perspective. The report detailed how MOB occupancy reached a record high of 92.7% in Q4 2025, while average rent growth remained healthy at 3.3% year-over-year and health systems lead new outpatient development.

"Healthcare real estate strategy has never been more critical as health systems face mounting pressure from policy shifts that are fundamentally reshaping their financial landscape," said Cheryl Carron, COO, Work Dynamics Americas, and President, Healthcare Division, JLL. "Organizations must now take a holistic view of their portfolios, considering not just patient access and clinical needs, but also how changing regulations, reimbursement cuts and new coverage mandates affect their bottom line. The health systems that proactively align their real estate decisions with these policy realities will be the ones that thrive in this new environment."

Strong demographic drivers fuel outpatient growth

An aging U.S. population continues to propel healthcare demand, with outpatient volumes projected to grow significantly over the next five years. Eight of the ten fastest-growing healthcare service lines are outpatient-focused, led by endocrinology, psychiatry and physical therapy/rehabilitation.

"Hospital systems are focusing on high-value outpatient services to combat tightening margins while expanding their reach into growing markets," said Matt Coursen, U.S. Healthcare Lead, Leasing Advisory, JLL. "Their site selection process has become increasingly sophisticated, involving comprehensive analysis of patient data, demographics, payor mix and site of care claims data."

Hospital systems are strategically expanding their outpatient footprint, accounting for 46% of the MOB leases JLL tracked in 2025. Health systems led construction deliveries in 2025, representing 57% of total square footage, with cancer care facilities seeing particularly robust expansion. Over 1.1 million square feet of hospital-owned cancer treatment centers were delivered in 2025.

Regional performance varies significantly, with markets like Orlando, San Antonio, Houston and Dallas-Fort Worth leading expansion driven by population growth and health system expansion strategies.

Limited supply creates pricing power

MOB construction starts remain significantly below pre-pandemic levels, with developer/operator-led starts at half of 2019 levels. This supply constraint, combined with absorption consistently exceeding deliveries, has created substantial pricing power for landlords. New construction rents are running at nearly twice in-place rents, with average MOB rents in the mid-$20s per square foot while new developments are leasing at over $40 per square foot.

"While year-over-year rent growth has moderated from its inflation-driven peak in 2023, it remained healthy and consistently outperformed office properties," said Kari Beets, Senior Manager, Healthcare Research. "Lease structures are trending toward more aggressive escalations, with 3% annual bumps or CPI-tied provisions becoming increasingly common."

Sophisticated tenant base drives market evolution

Healthcare industry consolidation is reshaping the tenant landscape, with private equity continuing to target fragmented specialties. The percentage of physicians in private practice declined to 42% in 2024, down from 60% in 2012. Psychiatry-related service lines comprised 10% of leasing activity tracked by JLL in 2025, while specialty providers overall represented 36% of medical leases.

"This consolidation is creating compelling investment opportunities," said Connie O'Murray, National Managing Director, Medical Property Management, JLL. "These sophisticated practice groups bring portfolio-scale requirements, with long-term leases and enhanced credit quality to the market. For property owners, this shift represents access to high-caliber tenants with greater expansion capacity and the ability to drive sustained investment performance. From a property management perspective, these portfolios, whether system or investor owned, provide the opportunity to optimize financial performance through consistency in service delivery utilizing industry leading best practices and innovative technologies."

Investment activity accelerates despite policy uncertainties

Despite regulatory headwinds, transaction volume accelerated, policy changes present near-term challenges. Changes to Medicaid eligibility and the expiration of enhanced ACA subsidies have caused marketplace enrollment to decline by 1.4 million people year-over-year, potentially increasing bad debt for health systems.

Transaction volume accelerated in Q4 2025, highlighted by Welltower's $7.2 billion portfolio disposition to Remedy Medical Properties and Kayne Anderson. Institutional owners took a much larger share of MOB purchases in 2025 than any time in the last decade, while national cap rates compressed by 60 basis points year-over-year in Q4.

"MOB fundamentals remain strong evidenced by limited new supply, rising occupancy and growing asking rents" said John Chun, Senior Managing Director and Medical Properties Group Leader, Capital Markets, JLL. "The gap between in-place rents and new construction rent bodes well for additional long-term growth. In addition, debt markets for medical outpatient assets remains robust, and the strong competitive environment has led to continued spread compression, providing accretive financing for investors."

JLL delivers comprehensive real estate and facilities solutions for over 1,400 leading healthcare systems and investors worldwide. We help them navigate complex regulatory environments, optimize financial performance, while also enhancing the patient and care team experience. Guiding clients through every stage of the property lifecycle-from planning and financing to construction and optimization - our professionals serve over 400 million square feet of healthcare property annually. We leverage deep technical expertise and innovative, data-driven tools to secure the most advantageous facilities and deliver industry-leading business intelligence. Visit jll.com/en-us/industries/healthcareto learn more.

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