Medical Office Building

  • MOBs are specifically designed for healthcare services, requiring specialized facilities like examination rooms and diagnostic areas, which can increase construction and renovation costs.

    Tenants in MOBs, such as doctors, clinics, and healthcare providers, usually have long-term leases due to significant fit-out investments and the critical nature of their services, providing stability attractive to lenders.

    MOBs must comply with various healthcare regulations, including ADA requirements, medical waste disposal, and patient privacy laws, which lenders evaluate during the financing process.

    The interior build-out for MOBs is often more costly than standard office spaces due to the need for specialized medical equipment, advanced HVAC systems, and enhanced electrical and plumbing systems.

    There is generally strong and consistent demand for healthcare services, resulting in lower vacancy rates and more reliable income streams. This demand is relatively inelastic, as medical care remains necessary regardless of economic conditions.

    Healthcare providers typically have strong credit profiles due to the essential nature of their services. Proximity to hospitals, healthcare hubs, and densely populated areas enhances the attractiveness of a MOB.

    Lenders consider location and accessibility as critical factors in financing decisions. Managing a MOB is more complex than other commercial properties due to the need for specialized services, such as medical waste disposal and infection control. Lenders also evaluate the management team’s experience and capabilities.