Healthcare Capital Markets 2025 Outlook

Cap Rates Are Likely To Stabilize MOB cap rates have adjusted to higher interest rates

Finding Opportunity

9.0%

• MOB cap rates have increased an average of 159 bps from their 2022 lows, reflecting adjustments to higher interest rates. This makes them attractive compared to risk-free investments. Expected NOI growth coupled with lower capital costs from interest rate cuts will stabilize cap rates in 2025 avoiding the cap rate inflation seen in years prior. • On a trailing 12-month basis, cap rates were relatively stable in 2024, though quarterly data showed more volatility due to asset mix changes. Similar volatility is expected in 2025 as buyers and sellers seek clarity in pricing. • Following the close of 2024, the 10-year treasury rate has been as high as 4.8% before dropping back down to 4.5% range. If the 10-year treasury were to approach 5.0%, we could see upward pressure on CRE cap rates in general. • With the uncertainty of an election behind us, investor sentiment has improved for 2025. Risks remain, but despite policy and geopolitical uncertainty, the underlying fundamentals of the healthcare sector will continue to drive investor decisions.

8.0%

7.35% 7.29% 7.32% 7.09%

7.0%

6.0%

5.0%

4.27%

4.0%

3.0%

2.0%

1.0%

0.0%

1Q2021

1Q2019

2Q2021

1Q2022

3Q2021

1Q2023

2Q2019

3Q2019

4Q2021

1Q2024

1Q2020

4Q2019

2Q2022

3Q2022

2Q2023

3Q2023

4Q2022

2Q2024

4Q2023

3Q2024

2Q2020

3Q2020

4Q2020

4Q2024*

Revista TTM Avg Revista Weighted

Revista TTM Weighted Revista Avg

10-Year Treasury

Source: Revista Med (based on Top 50 Markets, 7,500+ sf MOBs), Cushman & Wakefield Research

*Estimated

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