When it comes to medical office buildings (MOBs), location is everything. Traditionally, the industry has recognized two primary categories for MOBs: those located on a hospital campus and those situated off-campus. But as the healthcare real estate landscape evolves, so do our classifications.
Revista, a trusted name in the industry, has recently introduced a third category to better capture the nuances of MOB locations: the "Adjacent" category. This new classification encompasses properties that are within a quarter mil
e of a hospital campus but aren't directly on it. It's a subtle distinction, but one that can have significant implications for real estate investors and healthcare providers alike.
The Rent Perspective
One of the key metrics that real estate professionals look at is rent, and here's where the distinction between on-campus, off-campus, and adjacent becomes particularly interesting.
A recent analysis revealed the following insights:
On-campus MOBs command the highest rents, as one might expect.
Off-campus MOBs have lower rents, with a difference of about $1 in the second quarter of 2023 compared to on-campus properties.
MOBs in the Adjacent category fall right in the middle, with rents that are higher than off-campus properties but slightly lower than on-campus ones. Interestingly, while the Adjacent category has consistently maintained higher rents than off-campus MOBs, the difference between the two has narrowed over the past year.
Furthermore, rent growth trends for all three categories have been somewhat paral
lel, with a slightly steeper increase observed in the past year
A Closer Look at the Top 125 Metros
A comprehensive analysis of the top 125 metropolitan areas further underscores the importance of the Adjacent category. From a rent perspective, there's a clear distinction between Adjacent MOBs and the other two categories. This suggests that the proximity to a hospital, even if it's just outside the official campus, can have a tangible impact on property value and desirability.
The introduction of the Adjacent category is more than just a new label; it reflects the evolving dynamics of the healthcare real estate market. As we move forward, we'll be keeping a close eye on how this category correlates with other fundamental metrics in the industry. So, stay tuned for more insights and updates on this emerging trend!
Interested in learning more about the healthcare real estate market and how location can impact your investment? Contact a Healthcare Real Estate Specialist at Anvers Capital Partners today!