The Hidden Goldmine: Why Medical Office Buildings in Tier 2 Markets Are Drawing Investor Eyes in 2025

Medical office buildings have always been considered a stable asset class, but in mid-2025, we’re seeing a distinct shift in where the action is happening. While gateway cities still command high prices, investors are increasingly targeting MOBs in Tier 2 and Tier 3 markets—think places like Greenville, SC; Des Moines, IA; and Toledo, OH.

Why the change?

1. Cost vs. Return Balance – Cap rates in major metros have compressed, making it hard to find yield. Secondary markets offer more attractive spreads while still maintaining strong fundamentals.

2. Sticky Tenancy – Medical tenants (e.g., imaging centers, outpatient surgery, dialysis) are unlikely to relocate due to build-out costs, regulatory requirements, and patient loyalty. That translates into reliable rent rolls, even in smaller metros.

3. Demographic Shifts – More Americans are relocating to these lower-cost areas. As populations grow, demand for outpatient care follows.

4. Off-Market Deal Flow – In smaller markets, national REITs and institutional players aren’t as aggressive, leaving more room for local or regional groups to pick up assets at fair pricing.

5. Reimbursement Stability – With CMS and payor models stabilizing around value-based care, these facilities continue to generate predictable cash flow—key for underwriting.

This trend isn’t a fad. It’s an evolution driven by both macroeconomic realities and shifting care models.

At Lovelady Perspective, we help healthcare investors, brokers, and developers make sense of the noise with real-time market intel tailored to your deals. If you’re looking at MOBs in emerging markets, we can help you evaluate risk, opportunity, and next steps.

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