MOB Sale Prices Rise Amid Slowing Construction, Rising Rents

Executive Summary

• Medical outpatient building (MOB) investment volume rose by 12% quarter-over-quarter in Q4 to $2.8. billion, bringing the annual total to $9.4 billion.
• The average MOB sale price of $239 per sq. ft. in Q4 was 50% greater than the $193 per sq. ft. for traditional office buildings.
• The average MOB capitalization rate rose by 10 basis points (bps) quarter-over-quarter to 7.1%, while the average for traditional office buildings rose by 12 bps to 7.5%.
• Miami had the most MOB annual investment volume with $401 million, followed by Phoenix with $377 million and Las Angeles with $375 million.
• Average MOB triple-net asking rent reached a record $25.09 per sq. ft. in Q4, up by 0.3% from Q3.
• The MOB sector registered 564,000 sq. ft. of negative net absorption in Q4, ending a streak of 17 consecutive quarters of positive net absorption and bringing the annual total to 3.1 million sq. ft.
• The 59 markets tracked by CBRE had a combined 6.1 million sq. ft. of space under construction as of Q4, led by Dallas, New York City and Detroit.