Growth in MOB Development Shifts South and West
Expected growth in both location and specialty will define the medical outpatient building market in 2026, led by expanding health systems and strong demographic demand in several Sun Belt metros. According to JLL's 2026 Medical Outpatient Building Perspective, outpatient volume growth is projected to be the strongest in Orlando (16.4%), Dallas (16%), Houston (15.9%) and San Antonio (15.5%) by 2029. Southwest Florida (13.5%), Tampa (12.8%), Atlanta (11.7%), Denver (10.5%), and Phoenix and Richmond (both 10.3%) are also on track for double-digit growth.
Eight of the ten fastest-growing healthcare service lines are outpatient-focused, with endocrinology, psychiatry and physical therapy/rehabilitation among those leading the trend. JLL notes that hospital systems are expanding strategically into these high-value outpatient specialties to improve patient access, manage margins and optimize site selection based on demographics, payor mix and patient volume trends.
This momentum continues to underpin the broader MOB sector, which entered 2026 with record occupancy of 92.7% in the fourth quarter and rent growth of 3.3% year-over-year. Health systems drove nearly half of all MOB lease activity in 2025 and accounted for more than half of new construction deliveries, including over 1.1 million square feet of hospital-owned cancer treatment centers.
Limited new construction and strong absorption have sustained pricing power, with average in-place rents in the mid-$20s per square foot and new developments leasing at over $40 per square foot.
"Healthcare real estate strategy has never been more critical as health systems face mounting pressure from policy shifts that are fundamentally reshaping their financial landscape," said Cheryl Carron, COO of Work Dynamics Americas and healthcare division president at JLL.
"Organizations must now take a holistic view of their portfolios, considering not just patient access and clinical needs, but also how changing regulations, reimbursement cuts and new coverage mandates affect their bottom line. The health systems that proactively align their real estate decisions with these policy realities will be the ones that thrive in this new environment."
Provider consolidation continues to redefine tenancy, with larger medical groups and health systems driving long-term leases and enhancing credit quality in MOB portfolios. The share of physicians in private practice fell to 42% in 2024, down from 60% in 2012, while psychiatry-related service lines made up 10% of all leasing tracked by JLL in 2025. Specialty providers overall represented 36% of medical leases last year.
"These sophisticated practice groups bring portfolio-scale requirements, with long-term leases and enhanced credit quality to the market," said Connie O'Murray, national managing director of medical property management, at JLL.
"For property owners, this shift represents access to high-caliber tenants with greater expansion capacity and the ability to drive sustained investment performance. From a property management perspective, these portfolios, whether system or investor owned, provide the opportunity to optimize financial performance through consistency in service delivery utilizing industry-leading best practices and innovative technologies."
Transaction activity also strengthened late in the year, capped by Welltower's $7.2 billion portfolio sale to Remedy Medical Properties and Kayne Anderson. Institutional investors captured the largest share of MOB purchases in a decade and national cap rates compressed by 60 basis points year-over-year in the fourth quarter, JLL said.
Source: GlobeSt/ALM