MOB Investors Favor Income as Capital Markets Regain Momentum

The medical office building sector entered 2026 with growing momentum, supported by improving capital markets, greater lender appetite and resilient fundamentals.

Cushman & Wakefield’s MOB Capital Markets Mid-Year 2026 Update found that increasing capital flows into healthcare real estate, demographic tailwinds and consistent long-term performance drove investor demand during the first half of the year, setting the stage for continued activity through the remainder of 2026.

Investment Accelerates

MOB investment volume reached $6.7 billion in the first half of 2026, a 21% increase from a year earlier. Despite a 15% decline in transaction count, the average deal size rose to $20 million, underscoring “continued investor preference for larger, institutional-quality opportunities,” Cushman & Wakefield said.

Cap-rate compression also pointed to firmer asset pricing and increased competition.

Investors remain attracted to MOB because of steady rent growth, tight supply and high occupancy. Rents increased 2% year over year, although inflation is beginning to outpace rent growth, Cushman & Wakefield said.

Debt Market Dynamics

Capital availability for MOB investments also improved, with loan origination volume increasing 88% year over year amid stronger investment demand and transaction activity.

Banks remain the dominant source of MOB debt, accounting for nearly three-quarters of loan originations over the past five years. Fixed debt costs remained 80 basis points below their 2023 peak, while lenders have shown greater willingness to accept fixed-rate risk and higher loan-to-value ratios.

The sector also remains attractive to lenders because of its resilient fundamentals, consistent income returns and positive cash flow. Income returns have remained above 5.5% for seven consecutive quarters, while appreciation returns have turned positive, according to Cushman & Wakefield.

Outlook: More Momentum, With Caveats

Cushman & Wakefield said the MOB sector “remains one of the most compelling investment opportunities within commercial real estate” despite inflation, interest-rate and broader macroeconomic uncertainties.

High occupancy and steady rent growth should continue supporting performance through the end of the year, while investors remain focused on income returns when underwriting acquisitions. With appreciation returning, “buyer conviction in the sector will continue to strengthen,” the report said.

There are caveats. Supply-demand dynamics will remain a factor, particularly as elevated construction costs constrain new development. And the pace of monetary easing remains uncertain as inflationary pressures persist, Cushman & Wakefield said.

Still, consistent cash flow, improving capital availability, robust investment demand and the sector’s long-term performance track record position MOB as a preferred allocation for capital.

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