Why Medical Office Building Appraisals Require a Specialized Approach

Medical office buildings (MOBs) might seem like just another commercial asset, but when it comes to appraising them, a one-size-fits-all approach won’t cut it. Over the years, I’ve seen investors and lenders make assumptions about MOB valuations based on standard office space metrics—only to realize later they were way off the mark.

The reality is, healthcare real estate operates differently than traditional commercial properties. Appraisals need to account for the unique aspects of medical office buildings that directly impact their value—things like tenant stability, buildout costs, and regulatory considerations. A miscalculation in any of these areas can lead to major issues, whether it’s overpaying for an acquisition, struggling to secure financing, or undervaluing a strong-performing asset.

One of the biggest factors in medical office building appraisals is tenant quality and lease structure. Unlike traditional office buildings, where companies might move every few years, medical tenants tend to stay put. Physicians and healthcare providers invest heavily in their spaces, installing specialized equipment, plumbing for exam rooms, and ADA-compliant accessibility features. That kind of commitment leads to longer lease terms, often with renewal clauses that add even more stability to a property’s cash flow.

Then there’s the issue of buildouts and infrastructure. Standard office appraisals look at things like square footage and general market comps, but with MOBs, you have to consider the cost of medical-grade improvements. A property outfitted with radiology equipment, surgical suites, or advanced HVAC systems designed for infection control isn’t just a basic office space—it’s a specialized healthcare facility with significant capital investment behind it. These elements directly affect both market value and replacement cost, making a specialized appraisal critical.

Another key piece of the puzzle is compliance and location impact. Proximity to hospitals and major healthcare networks can dramatically affect demand and, by extension, value. Additionally, zoning laws, certificate-of-need regulations, and local healthcare policies can impact the usability and desirability of a property. Appraisers need to understand how these factors influence long-term investment potential, especially in markets where healthcare expansion is limited by regulation.

For anyone buying, selling, or financing a medical office building, having an appraisal from someone who understands the nuances of healthcare real estate isn’t just helpful—it’s essential. An accurate valuation ensures that the property is positioned correctly in the market, lenders have confidence in the asset, and investors know exactly what they’re working with before making a financial commitment.

If you need a professional appraisal on a medical office building or want to ensure your property is valued accurately, reach out today. Let’s make sure you have the insights you need to make informed, strategic decisions.