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Despite Uncertainty, MOBs Remain Firms' Top Priority

Though all eyes are on federal changes to healthcare, strong fundamentals have investors around the country still turning to medical office buildings as blue chip assets. Nationwide, 97% of healthcare investors surveyed indicated they were most interested in MOB product.

Texas Medical Center

Though healthcare is complicated, the fundamentals are simple. Growing populations with growing needs translate into expanding healthcare systems and climbing occupancies within healthcare properties. These strong fundamentals have increased demand for healthcare investment within the Texas-Oklahoma-Arkansas region. 

This same trend is also playing out across the U.S., and investors have been allocating significantly more equity for healthcare real estate investment since 2015. In CBRE’s Healthcare Real Estate Investor & Developer Survey, respondents anticipate spending $14.9B on healthcare assets in 2017.


Last year, MOB acquisitions increased by 34.4% to $1.4B in the Texas-Oklahoma-Arkansas region. While Houston and Dallas continue to capture the largest share of investor demand, secondary markets, such as Oklahoma City, El Paso and Little Rock, saw a significant increase in trade last year. The growth in investor appetite mirrors leasing demand, and there is a supply-demand imbalance for MOB assets.

Although Class-A, on-campus MOB product remains the most aggressively priced, demand for Class-A, off-campus product is growing and the spread between the two is narrowing.  

Robert Kramp enjoying Yellowstone

Houston is particularly strong, according to CBRE Director of Research and Analysis for the Texas-Oklahoma-Arkansas region Robert Kramp. Since 2010, the city has added 824,000 residents, the equivalent of the entire population of Little Rock, which has transferred into job gains for the healthcare sector.

Since 2010, Houston has had a 42.3% increase in total healthcare employment. With that level of employment gain, it is only natural to see the expansion of facilities.  

When you factor in Houston's disciplined pipeline, just 640K SF delivered in the last 18 months, it is no surprise that medical office is outperforming Class-A office in Houston, which is still reeling from low oil prices.

"Houston is a strong region because of the trifecta of strong research hospitals, medical centers as anchors, and college and universities to develop curriculum and staff," Kramp said. 

As the tides of national healthcare policy continue to shift, Kramp is optimistic about the sector, especially in Houston.

"At the end of the day, there isn't a single person that doesn't require healthcare."