M id A tlantic Real Estate Journal — 2026 Forecast — January 2026 — 9A
www.marej.com
2026 F orecast
The Clinical Group Healthcare Real Estate continues to set the standard for CRE resilience
H
ealthcare real estate, particularly medical office buildings and
Internet of Medical Things infra- structure to future proof assets. Patient demand remains steady. Average patient visits per provider have increased consistently since 2021, sup- ported by demographic growth, restored routine care, and economic stabilization. Physi - cian visit volume grew at a one percent compound annual growth rate from 2020 to 2025, though growth slowed notably in 2025 to just 0.9%. Smaller and rural provid- ers are increasingly adopting collaborative survival strate- gies. Clinically integrated networks and shared service
alliances allow independent hospitals to consolidate ad- ministrative functions, im- prove payer leverage, and maintain community gover- nance amid staffing shortages and reimbursement pressure. By the numbers, the U.S. contains more than 28,700 medical office buildings total - ing over 2.2 billion s/f. Manhat- tan ranks as the fifth largest medical office market, with 90.5 million s/f across 377 properties. Geographic con- straints and zoning limitations have limited new development, with only 636,100 s/f under construction as of mid-2025,
prompting vertical expansion and modernization of existing assets. Major projects such as Hospital for Special Surgery’s 400,000 s/f outpatient tower underscore Manhattan’s con- tinued institutional strength. Investment activity re- bounded in the second half of 2025. Third quarter medi - cal office transaction volume reached 2.7 billion dollars, up 27% quarter over quarter. Record rents of 25.20 dollars psf, positive net absorption of 2.4 million s/f, and expanding cap rates supported renewed investor confidence. MOBs traded at average cap rates of
6.9%, with specialized assets such as rehabilitation hos- pitals showing the strongest activity. Looking ahead, medical of- fice occupancy has reached 93%, the highest level in a decade, and tenant retention stands near 89%. Despite pol- icy uncertainty and elevated costs, demographic demand, outpatient migration, and adaptive reuse strategies po- sition healthcare real estate, particularly medical office buildings, as one of the most durable and resilient commer- cial real estate asset classes entering 2026. MAREJ
outpatient facilities, closed 2025 on a strong note, con- tinuing a multi-year pattern of resilience. While traditional office assets faced persistent headwinds, healthcare proper- ties remained stable and are widely expected to continue outperforming broader com- mercial real estate into 2026. Recent policy changes have added financial pressure on providers. The One Big Beau- tiful Bill Act, the most sig- nificant healthcare legislation since the ACA, is projected to reduce Medicare and Medicaid reimbursement, compress- ing provider margins by as much as 18% over five years. Hospital credit downgrades now outpace upgrades nearly three to one, and rising insur- ance premiums are driving more patients out of coverage, increasing uncompensated care risk. These pressures are accelerating providers’ push toward lower cost outpatient care models. Demographic forces remain a powerful tailwind. An ag- ing population, particularly in the Southeast and Central U.S., is increasing demand for healthcare services. While inpatient volumes are largely flat, patient acuity and average lengths of stay continue to rise. To protect operating margins, providers are shifting higher acuity services into ambula- tory and outpatient settings, reinforcing demand for modern medical office space. Operational and construc- tion constraints persist. Infla - tion, supply chain disruptions, and labor shortages continue to challenge healthcare devel- opment. The rollback of fed- eral clean energy incentives under the One Big Beautiful Bill Act has weakened the return on sustainability in- vestments, while skilled labor shortages are driving greater reliance on modular and pre- fabricated construction to maintain project timelines. Technology investment has become a core capital priority. More than 63% of healthcare systems are now investing in artificial intelligence, with AI adoption projected to grow at a compound annual growth rate exceeding 38% through 2030. As a result, developers are pri- oritizing smart ready facilities with 5G, edge computing, and
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