Market Research

Chart of the Week

November 30, 2023

Graph on screen.

Chart of the Week highlights economic data and commentary from our Insights & Intelligence and Investment teams on the market trends of the day.

This week’s chart demonstrates the resilience of medical offices. Since 2006, the medical office subsector has delivered on average the highest income returns compared with the four major property types. Investors have achieved high income returns in part due to the prevalence of medical offices in secondary markets and locations. While medical office has a reputation for “slow but steady” rent growth, the sector has delivered higher asking rent growth than traditional offices since 2000, averaging 1.8% on average compared with 1.4% average growth for traditional office space. Though traditional office rent growth does outpace medical office during periods of growth, medical office rents have held up much better during downturns.

Income Return, Medical Office v. Other Property Types

Chart showing Income Return, Medical Office v. Other Property Types

Source: NCREIF. Medical office references the “Healthcare” classification, per guidance from NCREIF that it only includes medical office assets.
Sample sizes for Medical Office are < 30 prior to 2013.

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