Medical Office Building (MOB)
A medical office building is a specialized commercial property housing healthcare providers (physician practices, outpatient surgery, diagnostics, specialty clinics), typically leased at higher rents and with longer leases than general office.
| MOB stands for | Medical office building |
|---|---|
| Tenants | Physician practices, outpatient surgery, imaging, dental, specialty clinics |
| What makes it an MOB | Most of the space is leased to healthcare users and built out for them: exam rooms, added plumbing and power, accessibility |
| Location types | On-campus (on or next to a hospital campus) or off-campus |
| Lease profile | Often longer terms than general office, because medical build-outs are costly to move |
What it means
MOBs are a distinct CRE subsector. Tenants are healthcare providers who need specific build-outs (exam rooms, plumbing, power, accessibility features). Once built out, tenants rarely relocate: medical leases often run 10–15 years with credit guarantees from hospital systems or stable physician-group tenants.
MOB cap rates typically trade 50–100 bps tighter than comparable general office because of lease term, tenant stickiness, and durability of healthcare demand. On-campus MOBs (adjacent to hospital systems) trade tightest; suburban off-campus MOBs slightly wider. Major MOB investors include Healthpeak, Ventas, and Healthcare Trust of America.
Related terms
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Common questions
What does MOB mean in commercial real estate?
MOB stands for medical office building: an office property leased mainly to healthcare providers such as physicians, surgery centers and imaging groups.
What classifies a building as a medical office building?
There is no single legal test. In practice a building is called an MOB when most of its space is occupied by healthcare tenants and built out for medical use, with exam rooms, extra plumbing and power, and accessible entries.
Why do investors like medical office buildings?
Medical tenants spend heavily on build-out and rarely relocate, so leases tend to be long and renewals common. Hospital-affiliated tenants can add credit strength. Lease terms still vary, so underwrite each tenant.
Sources
- Glen Gomez-Meade's experience as a licensed commercial broker and investor