Medical Office Demand Is Growing Again, but the Winners Look Different This Time

Medical office demand is starting to pick up, and the profile of winning assets is shifting in a noticeable way. For years, landlords could count on broad outpatient growth to lift most properties. Now the market is more selective, with tenants clustering around buildings that check a very specific set of boxes. The result is a gap between assets that lease quickly and assets that sit on the market far longer than expected.

The first differentiator is functionality. Operators want suites that support efficient workflows without extensive renovation. Standardized exam rooms, strong mechanical systems, modern restrooms, and clean patient circulation paths are no longer perks—they are requirements. Buildings with outdated layouts or limited plumbing capacity are being passed over unless the landlord is willing to invest in upgrades.

The second is location. Patient access has become the top driver of site selection. A property near growing residential areas, major commuter routes or strong payer pockets will lease faster than one tucked into a dated commercial district, even if the building is newer. Healthcare follows population patterns, and the strongest tenant demand right now is coming from suburban and exurban corridors with sustained growth.

Another factor is the strength of the operator. Landlords are gravitating toward tenants with predictable reimbursement, stable volumes and efficient practices. Behavioral health, imaging, primary care, dentistry and outpatient surgery platforms are at the top of the list. These groups bring longer leases, invest heavily in buildouts, and create more stable income streams.

Medical office is still one of the most resilient parts of commercial real estate, but it is becoming a market where small differences create real separation. The buildings that understand the needs of modern operators and adapt quickly are performing exceptionally well. Those that rely on legacy design or outdated assumptions are falling behind.

If you are evaluating a medical office acquisition or considering upgrades to make an existing property more competitive, let’s connect and look at the strategies that are working in today’s market.

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