Why Medical Office Space Is Getting Harder to Lock Down

If you’ve tried to lease or acquire medical office space recently, you’ve probably felt it: the squeeze. Inventory is tight, competition is up, and landlords are asking a lot more questions before signing new tenants. What’s driving it?

The short version: stable tenants in a shaky market are gold.

In the post-pandemic economy, medical office buildings (MOBs) have outperformed other office asset classes. They’ve remained relatively full, rent collections stayed strong, and demand has actually increased—especially from outpatient specialists, dental groups, and behavioral health operators.

But construction hasn’t kept up. Rising interest rates, tighter lending conditions, and sky-high build-out costs have slowed new MOB development across many secondary and tertiary markets. The result? Existing space is being snapped up fast, and deals are taking longer as everyone—from REITs to private investors—tries to make sure they’re locking in creditworthy tenants with long-term viability.

For behavioral health and senior-focused care groups looking to expand, this means being ready. Landlords want clean financials, credible operating history, and a clear vision for how the space will be used. If you’re not positioning yourself like a healthcare-backed business with a plan, you’ll get passed over—quickly.

Medical CRE might not be the sexiest sector in real estate, but right now? It’s one of the most competitive.

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