The report also highlighted that outpatient buildings are becoming more complex, increasingly combining imaging, surgery centers, labs and physician offices. | Photo Credit: JLL
What You Need to Know
- JLL reports medical outpatient building (MOB) occupancy hit a record 92.7% as outpatient growth continues to outpace new development.
- New MOB starts fell in 2023, bottomed in Q4 2024, and edged up in H2 2025, keeping inventories constrained.
- Health systems led tracked medical leasing in 2025, while consolidation and more aggressive escalations are reshaping deal terms.
- Investor interest increased, with Q4 2025 volume boosted by Welltower’s $7.2B portfolio disposition to Remedy Medical Properties and Kayne Anderson.
Learn More
CHICAGO — Demand for medical outpatient buildings remains durable as health systems and provider groups expand ambulatory footprints to meet an aging population and rising disease prevalence, according to the 2026 Medical Outpatient Building Perspective published by Chicago-headquartered commercial real estate services and investment management company JLL.
At the same time, constrained development is keeping occupancy high and supporting rent growth, while policy and financial pressures are raising risk for both occupiers and investors, the firm said.
In its 2026 Medical Outpatient Building Perspective, JLL said the MOB sector is being reshaped by demographic demand, expanding outpatient service lines and limited new development. The firm reported record occupancy of 92.7% and said average rent growth continues to outpace the broader office market, alongside increasing institutional investment.
JLL said outpatient volume growth is being sustained by demographics and disease prevalence. Of the top 10 growth areas for patient volumes, eight are in outpatient services, the firm reported. Hospital systems are shifting more care to outpatient settings and adding locations, which JLL said can deliver lower costs than inpatient care.
The report also flagged policy pressures on hospital margins, pointing to rising uncompensated care burdens for uninsured patients. In response, JLL said providers are prioritizing operating-cost reductions and efficiency gains and are optimizing real estate portfolios with outpatient expansion at the forefront.
On the supply side, the report notes that new MOB starts fell in 2023 as higher financing costs limited construction. Starts hit a trough in the fourth quarter of 2024 at 1% of inventory, then increased slightly in the second half of 2025 to 1.1%. Speculative development remains limited, and JLL said health systems lead construction starts and occupy a large portion of new projects, leaving limited available inventory.
The report also highlighted that outpatient buildings are becoming more complex, increasingly combining imaging, surgery centers, labs and physician offices. With absorption consistently outpacing deliveries, landlords have gained pricing power, particularly with tenants in high-margin specialties. Lease structures are trending toward more aggressive escalations, JLL said, and new-construction rents are running at nearly twice in-place rents.
Leasing dynamics are shifting as consolidation continues across the provider landscape. According to the report, tenants backed by health system credit led medical leasing in 2025, with health systems accounting for 46% of tracked leasing. Expansion was focused on large multispecialty clinics in the 40,000- to 60,000-square-foot range. Specialty providers represented 36% of tracked leasing, and psychiatry and behavioral health accounted for 28% of that specialty activity.
For investors, JLL said strong fundamentals — including high occupancy and steady rent growth — continue to support interest in the sector. Transaction volume accelerated in the fourth quarter of 2025, led by Welltower’s $7.2 billion portfolio disposition to Remedy Medical Properties and Kayne Anderson, JLL reported. Outside that entity-level transaction, JLL said M&A was more limited than in 2024 even as single-asset and small-portfolio sales remained consistent with 2024 levels.
Institutional groups’ share of MOB purchases in 2025 was larger than any other year this decade. While dry powder is near all-time highs, the firm said funding transactions can be difficult for assets that do not fit neatly into common risk buckets, making pricing challenging. Looking ahead, The report said that improving operating fundamentals and more active debt markets could support stronger volume in 2026, but warned that policy changes and declines in coverage could materially affect specific assets and service lines.
This article is based on a report originally published by JLL on March 24, 2026.