MOB Tenant Retention Rates Set Recent Highs in 4Q19
Industry participants often point to the “stickiness” of medical office leases. This stickiness is measured in tenant retention rates. Generally, over the past 11 years, average MOB retention rates have trended between 75% and 83%, according to Revista’s 4th Quarter Industry Fundamentals Report. These are remarkably high tenant retention rates and would stack up very well against regular office or other forms of commercial real estate. Most recently the retention rates have been trending underneath 80.2% (2019 and up to 3rd quarter 2019). That changed in 4Q19 when the average tenant retention rate rose to 82%. Remember this data represents approximately 150 million SF and is provided from large investors in the sector.
With the onset of the Covid-19 pandemic this will be an important metric to track in 2020 and beyond. Take comfort in the fact that over previous cycles/downturns the rate held up remarkably well, especially when compared to other asset classes.
Medical Office Average Retention Rates; Source: Revista