The aging baby boomer population is driving demand for medical office buildings nationwide. In Atlanta, it has caused rents for top-tier medical office space to eclipse traditional top-tier office for the first time since the pandemic.

Asking rents for Class-A medical office space in the metro area averaged $35.86 per SF in the second quarter, surpassing traditional Class-A office space by 81 cents, according to an Avison Young study. That gap widened to $1.40 per SF by the third quarter and is expected to continue to increase.  

Medical office rents generally were up to $5 less per SF than traditional office rents each year through 2025.

The flip-flop in rates is due in part to inflated construction costs and limited available office space geared to medical tenants. But one of the main reasons is that the largest generation in the U.S. is entering its twilight years and requiring more healthcare services. 

“Atlanta is ahead of the trend. You’re going to see this nationally,” said Melody Allred, a national franchise real estate adviser at Carr Realty who specializes in CRE for therapy, dental and medical practices nationwide.

America’s aging population is fueling outpatient volume growth as hospital systems shift care to outpatient settings and expand more locations, according to a 2026 JLL report. Limited new development is helping to pump up medical office rents as a result.

“We see so many wellness brands right now that are quite literally designed to extend your life,” Allred said.

“As long as that’s the case, you’re going to have more doctors opening” new office locations. 

For healthcare systems, medical office buildings and outpatient settings are less costly than inpatient care, especially as policy changes add pressure on those systems to control cost margins for uncompensated or uninsured patient care, according to JLL. Outpatient facilities are at the forefront of healthcare systems’ models to help control costs.

The average cost for a surgical procedure at an ambulatory surgery center was a little more than $3,100, versus more than $7,700 in an outpatient hospital department, according to a 2024 study in The American Journal of Managed Care. Healthcare companies and medical practices have been expanding their real estate footprint in recent years as a way to grow closer to their patients’ households as well. 

Metro Atlanta has seen a boom in medical office leasing activity over the past year. The overall medical office space vacancy rate in the metro area declined to 6.6% in the second quarter, down from 7.3% a year earlier, according to data compiled by Lee & Associates.

Medical tenants leased 168K SF more than they vacated during that period, up from negative net absorption of 51K SF in Q2 2025, according to Lee & Associates. That is a sharp reversal from 2025, when leasing largely remained flat. 

The largest deal in the second quarter was Four Corners Primary Care Centers’ renewal of 28K SF at 5300 Oakbrook Parkway in Norcross, according to Lee & Associates. But one of the highest-profile medical transactions in the past year was Centurion Foundation’s $95M purchase of Northlake Mall, which will be entirely leased to Emory Healthcare. 

Metro Atlanta’s broader office market has seen marked improvement over the past year but still pales in comparison to the improving fundamentals experienced by the medical office market. While companies absorbed nearly 1M SF of office space in the second quarter, the overall vacancy rate in the metro area still exceeds 30%, according to CBRE. While companies have flocked to Class-A space, there is still a plethora of available offices all over the region.

The contrast with the office market and the demand for well-located medical properties is helping those landlords command pricing, according to Lee & Associates.

Atlanta-based real estate firm RGRE has already obtained premium rents for medical office space at Cumberland Center IV, a nine-story, 218,500 SF onetime traditional office building in Cobb County. Since its purchase, RGRE has been converting empty traditional office space to cater to medical users.

The building was already 35% occupied by medical tenants, RGRE Executive Vice President Michael Ulin said. But the firm added another 60K SF of medical tenants since it acquired the property last year for $53M, RGRE CEO Ryan Goldstein said. 

Rents on space leased to medical tenants rose to an average of $37.50 per SF from $30 when it was marketed as regular office space, Ulin said.

“Across the board, outside of what we own, you are seeing limited developments for medical office space,” Ulin said, adding that inflated construction costs and elaborate interior renovation needs by medical tenants are among the reasons for higher rents.

And as baby boomers turn 80 and begin to spend about 15% of their income on healthcare needs, that adds fuel to the demand for medical office space.

“Staying healthy longer and living more fulfilled lives is an incredible gift from modern medicine,” senior housing analysis firm NIC Map said in a spring report. “This increase in the length of life also means an increase in the expected need for senior housing and a rise in health concerns for the aging wave.”