Record MOB Sales in 2017, Smashing Previous High

Last year was a record-breaking year for medical office sales, according to a brand-new report from JLL. The $10.4 billion in transactions in 2017 smashed the previous annual high of $9.03 billion in 2015.

New money is flooding the sector, lured by healthcare’s relative stability and demographic growth from aging Baby Boomers. New investors, particularly institutional money, have taken notice of the yields that medical office assets offer, according to JLL’s Mindy Berman. While cap rates have compressed, medical office properties still offer a better yield than other core real estate types.

For the first time, cap rates below 5% were no longer rare, and several large portfolios have traded including Duke Realty’s disposition of its $2.6-billion MOB portfolio so it could be a single-asset type REIT. Other noteworthy deals include Heitman’s acquisition of the PHT Medical Office portfolio.

Berman noted that supply has increased to satisfy buyer demand. “For many owners and developers of medical office, if they’re going to sell, they see now as a great time,” she told Connect Healthcare, adding that pricing is “as high as I’ve ever seen it.”

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