MOB Sales Soar as Cap Rates Slide


In a year that saw the largest volume of medical office building sales on record, prices took a sharp dip before soaring steadily upwards while cap rates ended the year on a downward slant. Cap rates in the MOB sector have been generally trending downward since the fourth quarter of 2012, according to advisory group Hammond Hanlon Camp LLC.

The year prior to 2013 saw MOB sales volume of $5.2 billion nationwide, and HHC says it was unsurprising that last eyar saw that tally surpassed by a wide margin. “Over $6.4 billion in transaction volume was reported by Real Capital Analytics in 2013, making it the most active year in the medical office building industry’s young but growing history,” according to HHC’s quarterly update on the sector. “The annual volume represents over $1 billion in additional transaction volume compared to prior peak volumes of between $5.4 and $5.5 billion in 2006 and 2007.”

Pricing in Q4 averaged $248 per square foot, a year-over-year increase of 12% from $222 per square foot recorded in the last quarter of ‘12. HHC says the average cap rate reported for transactions over $5 million was 7.1% in Q4, “which is slightly lower than last quarter’s average cap rate of 7.3% and significantly lower than a year ago, when cap rates averaged 8.0%.” However, RCA data show that MOB cap rates still have a way to go match those commanded by office and multifamily assets.


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