Cushman & Wakefield’s head of life sciences and healthcare insights Sandy Romero has revealed that occupancy for the most recent medical outpatient building (MOB), was 92.8%. That’s after 15 straight quarters of growth.
It isn’t surprising. As GlobeSt.com has previously reported, 2025 could likely be called the year of MOBs, according to CBRE Research. Specifically, an aging population, growing healthcare spending, transformative technologies, and consumer preferences will make these properties an increasingly popular choice for care delivery.
There are 61 million people aged 65 and over, which is currently 14% of the total population. By 2030, that’s expected to be 70 million, representing 20% of everyone, as the last of the baby boomers reach retirement age. Seniors will cause healthcare spending to jump by 31% to nearly $2 trillion. As people age, the average per capita annual healthcare spending of $8,000 for those under 65 jumps to $20,000; for groups 65-to-84, it then leaps to $35,000 for those over 85.
“It’s a combination of strong property fundamentals and growing demographic drivers,” Romero said. “MOB absorption has been very strong in the last three years, averaging nearly 14 million square feet per year.”
The current absorption rate is 25% over the previous three-year quarterly average. It’s outpacing the new MOB space delivery by almost three million square feet annually.
“With absorption outpacing new supply, the occupancy rate has increased steadily each quarter,” Romero said, adding that increasing healthcare needs of an aging population is the major driving factor. “Over a third of total U.S. healthcare spending is allocated to people over 65, and this population is expected to increase another 20% by 2032. This growing cohort will create more demand for additional services and facilities focused.”
According to Cushman & Wakefield’s 2025 healthcare update, some conditions are making it difficult for the industry to keep the necessary pace of construction. In addition to construction costs and labor, MOB staff shortages, particularly physicians, limit how many new facilities can be used, which restricts building.
Transaction activity was also up in the first three quarters of 2024 — 62% year-over-year. Portfolio sales activity was up 54% over the same period in 2023. Cap rates saw some compression in 2024 Q3 as investors expected that the Federal Reserve would keep cutting interest rates.