34 — Fall Preview — September 2026 — M id A tlantic Real Estate Journal
www.marej.com
M edical O ffice
By Jordan Sobel and Dan Bottiglieri, Cushman & Wakefield NJ medical office draws investor attention as healthcare tenancy differentiates the sector
N
ew Jersey’s medical office investment mar - ket is demonstrating a
Healthcare tenancy can pro - vide an investment thesis that differs meaningfully from tradi - tional office. Investors are evaluating the durabil - ity of medi - cal demand, tenant ten - ure and loca - tion along - side the fundamentals of the underlying real estate. Recent transactions show that buyer demand is not limited to one type of medical office investment. At 175 Morristown Rd. in Basking Ridge, Cushman & Wakefield marketed a 26,063 s/f medical office building that was 100% occupied by five tenants, with an average tenant tenure exceeding 10 years. The property was an - chored by Franklin Surgical Center and carried a 9.61-year weighted average lease term. The marketing process gener - ated 14 written offers before the property sold for $5.525 million, or $213 psf, at a 7.86% capitalization rate. In Westwood, 400 Old Hook Rd. presented a different in - vestment profile. The 33,277 s/f property was 70% leased at the time of sale and anchored Dan Bottiglieri
by Valley Health System, Englewood Hospital and Cu - ratioCuralto Foot & Ankle. Ownership had invested more than $1.75 million in capi - tal improvements, while the remaining vacancy created meaningful lease-up potential. Despite that execution com - ponent, the process generated 12 competitive written offers and the property sold for $4.35 million at an 8.3% in-place capitalization rate. The contrast between the two transactions is notable. One offered stabilized oc - cupancy, long-duration ten - ancy and durable cash flow. The other paired established healthcare tenancy with a clear value-creation opportu - nity. Both attracted double- digit written offers. That breadth of demand is one reason medical office continues to distinguish itself within New Jersey’s broader office investment market. That does not mean buyers are overlooking risk. Across New Jersey’s investment mar - ket, pricing remains disci - plined, and investors continue to scrutinize lease rollover, tenant concentration, building condition and future capital requirements. The presence of medical tenants alone does not make an asset attractive.
Location, tenancy, lease struc - ture and basis remain critical to the investment decision. Medical office, however, benefits from characteristics that can make well-positioned assets particularly compelling. Many healthcare providers require specialized buildouts and serve patient popula - tions tied to their surround - ing communities. Proximity to hospitals, health systems and established healthcare corridors can therefore be an important consideration for both tenants and investors. The two recent sales demon - strate how those characteristics can translate into demand even when the underlying investment profiles differ. At 175 Morristown Rd., buyers responded to long-term tenancy and income stability. At 400 Old Hook Rd., they were willing to underwrite existing vacancy in exchange for the opportunity to add value to an asset with established medical tenancy in a strong healthcare location. Heading into the remainder of 2026 and 2027, we expect that distinction to remain important. Investors will con - tinue to be selective, but medi - cal office properties with es - tablished healthcare tenancy, strong locations and credible income growth or lease-up op -
portunities should remain well positioned to generate interest. The opportunity will not be limited to fully stabilized prop - erties. Investors are demon - strating a willingness to con - sider vacancy and execution risk when the basis, existing tenancy and potential upside are compelling. At the same time, competition for stabi - lized medical office with long- term healthcare occupancy can create a deep buyer pool. For owners considering a sale, that makes the story behind the real estate increas - ingly important. Investors are not treating all suburban office buildings alike. Tenant pro - file, lease structure, location and the ability to articulate a credible path forward can materially shape both the depth of the buyer pool and the ultimate execution. New Jersey’s medical office market is providing evidence of that distinction now, and we expect it to remain one of the more closely watched seg - ments of the state’s private investment market as 2027 approaches. Jordan Sobel, director, and Dan Bottiglieri, senior associate, are members of Cushman & Wakefield’s Capital Markets Group in Morristown, NJ. MAREJ
level of buyer demand that increasingly distinguishes it from the broader sub - urban office sector. The second quarter of
Jordan Sobel
2026 offers a clear indication. Thirteen medical office prop - erties between $2 million and $50 million traded across New Jersey for a combined $79.1 million, according to Cushman & Wakefield research. The average transaction totaled $6.08 million, or $198 psf. Activity was concentrated in Morris, Essex and Bergen counties, with larger medical office transactions accounting for a significant share of over - all volume. Perhaps more telling than transaction volume is who is buying and what they are willing to pursue. Investment buyers accounted for 77% of medical office transactions during the quarter and 87% of total dollar volume. Eighty- two percent of the properties that traded were fully leased. Those numbers reflect what we are seeing in the market:
Deadline: October 14, 2026 Contact Lea:@marejournal.com | P: 781-740-2900
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