Why Hospital Proximity Matters in Medical Real Estate Valuations

In medical real estate, location isn’t just about visibility or foot traffic—it’s about access to the healthcare ecosystem. And few factors carry more weight than proximity to a hospital or major healthcare system. The closer a property is to a hospital, the stronger its position in the market. But why does this matter so much, and how does it affect valuations? Let’s break it down.

The relationship between hospitals and surrounding medical facilities is all about referral networks and patient flow. Medical offices, surgery centers, imaging facilities, and specialty clinics thrive near hospitals because they tap into a built-in pipeline of patients. When a provider is located just minutes from a hospital, it’s easier for them to coordinate care, accept referrals, and handle follow-up visits—and that’s exactly what makes these properties more valuable.

Hospital proximity also boosts tenant stability. Large healthcare systems often lease or purchase space close to their main campuses, and their presence typically means long-term, creditworthy tenants. Even independent providers prefer locations near hospitals to access referrals and serve hospital-affiliated patients. This kind of tenant mix—stable, established, and healthcare-focused—drives predictable rental income, which translates to stronger property valuations.

But it’s not just about tenants. Hospitals are magnets for entire healthcare ecosystems. The area around a major hospital often becomes a medical corridor, attracting pharmacies, outpatient facilities, diagnostic centers, and specialist offices. Properties in these corridors benefit from increased demand and lower vacancy rates, creating a competitive market where values remain strong.

Timing and accessibility matter too. Being close to a hospital can reduce patient transportation times, which is critical for specialty services like ambulatory surgery centers or urgent care facilities. It’s not just convenient—it’s often part of provider agreements and insurance network preferences, making locations near hospitals more desirable for tenants.

Of course, there are layers to this. Hospital proximity is most valuable when it matches the right type of healthcare service. A rehabilitation center or imaging facility thrives near a hospital because it captures downstream patient flow. On the other hand, a behavioral health facility may not depend as heavily on hospital referrals, making proximity less critical to its valuation.

When it comes to appraisals, hospital proximity isn’t just a perk—it’s a value driver. Appraisers factor in not only distance but also ease of access, hospital reputation, and the size of the healthcare system. A property next to a large regional hospital with a strong specialty program may be worth significantly more than a similar building near a small community hospital with limited services.

In the end, being near a hospital connects a medical property to the heart of the healthcare system. It brings patients, providers, and stability together, which is exactly what lenders, investors, and operators want to see reflected in an appraisal.

If you’re considering buying, selling, or appraising medical real estate near a hospital, let’s connect. I’ll help you understand how proximity shapes value and what it means for your property’s potential.