May 24, 2019
Mike Hargrave

MOB Cap Rates Coming Off Lows

Medical Office Building (MOB) capitalization rates are trending up from their lows set in late 2017 and early 2018. The average cap rate for MOBs was 6.7% in the 1st quarter of 2019. This was up from 6.5% in 4Q18 and up a resounding 80 basis points or from 6.1% just one year ago. In fact, MOB average cap rates are at their highest point since the 2nd quarter of 2016.

One reason cap rates have risen is the mix of properties that have been trading over the past few quarters. Revista has observed fewer high-profile superior and institutional grade properties and portfolios trading during late 2018 and early 2019 compared to late 2017 and early 2018.

But trends will change, as we all know. The Welltower/CNL portfolio closed in May, 2019 which should impact both volumes and pricing so we will monitor any movement in this trend.

Avgerage MOB Cap Rate Trend (TTM Basis), Source : Revisamed.com

Avgerage MOB Cap Rate Trend (TTM Basis), Source : Revisamed.com