New medical office building (MOB) construction was prominent in 2016, according to Krone Weidler, of brokerage firm Marcus & Millichap. New MOB office deliveries in 2017 (based on preliminary construction data) are expected to meet or exceed totals from 2016, says Hilda Martin, principal at medical real estate data firm RevistaMed.
At the same time, investors should expect cap rates in the sector to increase this year as well, Weidler notes, as a result of the Fed raising its benchmark interest rates. That shouldn’t have too much of a negative impact on sales activity, however, notes Martin.
“In terms of sales activity in the medical office sector, we believe pricing will remain strong in 2017, with activity consistent with recent quarters—strong, but off peak from 2015 highs. We expect a continued high interest from private equity groups,” she says.