Medical office buildings in Orlando are the most demand-proof office-class CRE asset available. They outperform general office by 8\u201310 percentage points on occupancy. Their tenants sign 7\u201315 year NNN leases because they cannot move their patient base. $723M in new hospital construction at Lake Nona alone, AdventHealth's $423M cancer care hospital plus Nemours' $300M pediatric expansion, is converting Lake Nona from a medical campus into a medical destination, pulling satellite physician offices and specialist clinics within a 3\u20135 mile radius for the next decade. MOB's structural outperformance derives not from management or market timing but from the economic structure of medical practice. A physician's patient panel is built over years through referrals, insurance network relationships, and proximity to their hospital. When a physician moves, they lose 30\u201340% of their patient base, a direct hit to revenue. This switching cost creates tenant captivity that no general office tenant experiences. MOB tenants sign 7\u201315 year NNN leases and renew at rates above 80%, compared to 50\u201355% for general office. AdventHealth's four-campus Orlando network (Lake Nona, Celebration, Altamonte, Apopka) each generates physician group demand within a 3\u20135 mile radius. The physician PE consolidation trend, when PE acquires a practice, the first real estate decision is institutionalizing the lease into a NNN structure, creating a wave of NNN MOB absorption that is invisible in market statistics until the transaction closes. Healthcare REITs (Healthpeak Properties, formerly Physicians Realty Trust; NNN Healthcare; Healthcare Trust) are the exit buyers, validating the 5.5\u20136.5% cap rate with active transaction evidence.
The 8\u201310 percentage point occupancy advantage that medical office holds over general office is not a coincidence of current market conditions. It is the structural output of how medical practice economics work. Understanding the mechanics of medical tenant captivity, the lease structure differences, and the capital expenditure profile explains why MOB consistently trades at tighter cap rates, holds occupancy through recessions, and commands renewal rates that general office landlords do not achieve.
| Metric | General Office (Class B) | Medical Office (MOB) | MOB Advantage |
|---|---|---|---|
| Direct Vacancy Q4 2025 | 17.6% metro blended | ~8–9% (MOB-specific) | 8–10 ppt lower |
| Tenant Renewal Rate | 50–55% | 80–85% | +25–30 ppt |
| Avg Lease Term | 3–7 years | 7–15 years | +4–8 years |
| Lease Structure | Mix NNN/Gross | NNN dominant | Landlord protection |
| TI Per Turnover | $55–$80/SF | $60–$120/SF | Higher but turnover far less frequent |
| Capex Predictability | Unpredictable | High, tenants rarely modify shell | Lower effective capex/year |
| Recession Performance | Severe, tracks employment | Minimal, population-driven | MOB recession-resistant |
| Remote Work Impact | High, hybrid compresses space | None, procedures require presence | MOB displacement-proof |
| Cap Rate Orlando | 6.0–7.0% (A) / 8–11% (B/C) | 5.5–6.5% NNN | 50–100 bps tighter |
| Healthcare REIT Buyer Pool | Absent | Active (Healthpeak, NNN, HT) | Deeper exit pool |
| Tenant Switching Cost | Low | Very high, patient base loss | Captive tenant |
| Telemedicine Impact | Significant | Minimal, procedures in-person | Demand floor protected |
| Annual Escalations | 2.0–3.0% | 2.5–3.5% | Higher effective growth |
The four bars each tell the same structural story from a different angle. Vacancy: medical office runs at approximately half the general office vacancy rate. Renewal rate: 82% of medical tenants renew vs 52% of general office tenants, 30 percentage points of annual NOI certainty. Lease term: 11-year average MOB lease vs 5-year general office means 11 years of income before rollover risk. Cap rate: MOB prices at 6.0% vs 7.5% Class B general office. Those 150 basis points on a $10M asset represent $1.5M of additional value that the market assigns to the medical tenant's structural captivity.
The telemedicine thesis, that video visits would permanently reduce the need for physical physician office space, has been definitively refuted by MOB occupancy data through 2025. The reason is mechanical: telemedicine handles intake, follow-up, and low-acuity consultations. It does not handle annual physical examinations, diagnostic imaging (X-ray, MRI, CT, ultrasound, DEXA), procedures (colonoscopy, EGD, minor surgery, infusion therapy, injections, biopsies), laboratory draws, dermatological procedures, wound care, physical therapy, or any assessment requiring direct physical examination. These categories represent 60\u201370% of all physician visit volume by time. They cannot be conducted remotely. As a result, every practice that added telemedicine capability still needs the same number of exam rooms, procedure suites, and imaging spaces. MOB demand is population-driven. Orlando adds 1,500 residents per week. The demand floor is structural.
Lake Nona Medical City is not a marketing concept. It is a functioning, expanding medical campus that has attracted UCF's College of Medicine, Nemours Children's Health System, the U.S. Department of Veterans Affairs, AdventHealth, Sanford Burnham Prebys research institute, GuideWell (Florida Blue), and 17+ life science and digital health companies. The $723M in new hospital construction committed for 2026\u20132028 delivery, AdventHealth's $423M cancer care hospital (2026) and Nemours Children's Health's $300M expansion (2028), will each generate demand for specialist physician offices, outpatient procedure suites, imaging centers, and therapy practices within a 3\u20135-mile drive radius.
| Institution | Facility | Size | Investment | Delivery | MOB Demand Impact |
|---|---|---|---|---|---|
| AdventHealth Lake Nona | Cancer care hospital + MOB | Large hospital + MOB | $423M | 2026 | Oncology, hematology, radiation oncology satellites |
| Nemours Children’s | Hospital addition + care center + admin | 260,000 SF total | $300M | 2028 | Pediatric specialty satellites: neuro, ortho, pulm |
| UCF College of Medicine | Medical school + research | Campus anchor | Ongoing | Operational | Physician training pipeline within 10 miles |
| VA Medical Center | Full-service veterans hospital | Large campus | Federal | Operational | Mental health, orthopedics, primary care satellites |
| Sanford Burnham Prebys | Research facility | 175,000 SF | Major | Operational | Clinical trial support, pharmaceutical research |
| GuideWell Innovation Center | Wet lab + office + innovation | 92,000 SF (3 floors) | Significant | Operational | Digital health, medical device startup space |
| UCF Life Sciences Incubator | BSL-2 wet laboratory | 10,000 SF, 7 labs, 5 offices | UCF/GuideWell | Operational | Early-stage life science companies |
| Nona Medical Center | Purpose-built MOB | 45,000 SF, 3 floors | Onicx/JLL | Delivered | Newest Lake Nona MOB comp |
$723M Investment: The combined $723M in committed hospital construction at Lake Nona, AdventHealth $423M + Nemours $300M, is not speculative development. Both projects have broken ground or are in final pre-construction with committed financing. The satellite MOB demand these hospitals generate operates on a 12\u201336 month lag from hospital opening. Investors who acquire or develop MOB within 3 miles of either campus before those satellite practices open will be positioned to lease to the exact tenants those hospitals produce.
Every major hospital expansion produces a predictable satellite demand wave for medical office space. The mechanism is well-documented in healthcare real estate research: for every dollar of new hospital construction, $0.40–$0.60 in adjacent medical office demand is generated within a 3–5 mile radius over the following 24–48 months. Applied to the $723M Lake Nona pipeline, that implies $289M–$434M in satellite MOB demand absorption — space that specialists, procedure centers, outpatient imaging facilities, therapy practices, and ancillary health services need to serve the patient volume the new hospitals generate.
Core hospital-employed physician groups establish satellite offices within 2 miles. Demand: 3,000–8,000 SF per specialty group, NNN, 10-year terms. These tenants are guaranteed — the hospital system sponsors them.
Independent specialists relocate to serve new patient catchment. Demand: 1,500–5,000 SF per practice, mix of NNN and modified NNN. Competition for space intensifies — vacancy in the 3-mile radius compresses from 8–12% to 4–7%.
Ancillary services — physical therapy, behavioral health, imaging, surgery centers, specialty pharmacy — fill the remaining inventory. Rents step up 15–25% from Phase 1 levels. The corridor is fully formed.
The investor thesis for Lake Nona MOB is straightforward: AdventHealth's $423M cancer hospital opens in 2026. The satellite demand wave peaks in 2027–2028. Investors who close on MOB acquisitions or development sites within 3 miles of the campus in 2025–2026 will be leasing to cancer specialists, oncology infusion centers, genetic counseling practices, and radiation therapy groups at rents 20–35% above general suburban office — backed by hospital-system guarantees or PE platform credit. The window to acquire before the demand wave peaks is measured in months, not years.
The Lake Nona innovation ecosystem has attracted institutional research organizations, funded digital health startups, medical device companies, and pharmaceutical research entities. This directory represents the companies that have publicly identified Lake Nona as a location — the population of companies that will generate demand for upgraded research space, clinical facilities, and specialty MOB as they scale.
The GuideWell Innovation Center at 6555 Sanger Road is a 92,000 SF facility built by GuideWell (parent company of Florida Blue) in partnership with Tavistock. The three-floor building hosts a portfolio of digital health, medical device, and healthcare technology companies. Named current and recent tenants include: Access DX (novel healthcare testing), ELMED Systems (medical equipment, waste technology, modular hospital solutions), Laconic Digital (digital health infrastructure), and Certara (model-informed drug development, global leader with 3,500+ SF at GuideWell). GuideWell has made direct venture investments in 17 companies through its portfolio program, creating a pipeline of companies that may grow into larger MOB or specialized clinical space as they scale from startup to commercial stage.
Within GuideWell, UCF operates a 10,000 SF BSL-2 wet laboratory, the Lake Nona Life Sciences Incubator, offering 7 private research labs, 5 office suites, and shared equipment including autoclave and common laboratory infrastructure. BSL-2 designation means the facility is equipped for work with microbiological agents, appropriate for vaccine development, diagnostic assay development, and pharmaceutical research. The Plug and Play HealthTech accelerator operates 9 startups at the incubator. Named current participants include Fourier Health (healthcare technology), Intelligence Factory (AI health intelligence), Klaim AI (healthcare AI automation), Baton Health (health management), and Wisedocs (medical document intelligence). As these companies scale, they become MOB tenants.
Beyond the incubator, Lake Nona hosts established healthcare and research institutions. Fountain Life, an AI-enabled precision diagnostic center, recently opened on campus. Protean BioDiagnostics operates diagnostics infrastructure. Tabula Rasa HealthCare, a pharmaceutical technology company focused on medication risk management, is based at the Medical City. The Johnson and Johnson Human Performance Institute operates a training and wellness research facility. Florida Cancer Specialists, one of the largest community oncology networks in the U.S., has clinical presence. Verizon’s 5G Innovation Hub operates to develop telehealth applications on 5G infrastructure. BioCentral Laboratories, with commercial products including BLAZETAMER380 and PolyCom Global, operates in the ecosystem. Each is both a current tenant and a referral network for physician practices.
AdventHealth is the dominant healthcare system in Central Florida by campus count, employed physician volume, and total inpatient capacity. Its four primary Orlando-area campuses each generate satellite MOB demand from the physician groups, specialist practices, and outpatient service providers that want proximity to the hospital for referrals, admitting privileges, and patient logistics.
The Lake Nona campus is the most active expansion site, anchored by the $423M cancer care hospital and adjacent MOB delivering in 2026. Satellite demand centers on oncology-adjacent specialties: radiation oncology, hematology/oncology, palliative care, genetic counseling, infusion therapy, and cancer rehabilitation practices. These practices want to be within 2–3 miles on the Narcoossee Road and Lake Nona Boulevard corridors. The East Park Village mixed-use development (45,000 SF Nona Medical Center, Onicx Group, JLL leasing) is the model. MOB asking rents: $28–$38/SF NNN for new clinical space.
Celebration serves the theme-park corridor population and rapidly growing residential communities along US-192 and US-27. Patient base includes a high concentration of tourism industry workers, Disney Cast Members, Universal employees, and hospitality workforce. Satellite MOB concentrates on US-192 between Celebration and Disney, and on US-27 toward Four Corners. The W.P. Carey $340/SF NNN acquisition at 1345 E Osceola Pkwy demonstrates institutional pricing. MOB asking rents near Celebration: $22–$30/SF NNN.
The Altamonte campus serves Seminole County’s dense suburban population with satellite demand skewed toward specialty medicine: cardiology, gastroenterology, rheumatology, dermatology, and elective procedures. The I-4 Altamonte Springs corridor has historically been an underserved MOB market, most available space is in older Class B general office. This creates both a tenant demand opportunity and a conversion opportunity (Class B within 2 miles of the hospital repositioned at $22–$28/SF NNN vs $16–$20/SF for general office). This is the most directly applicable geography for the Class B/C to medical conversion thesis.
The Apopka campus was acquired from EQT Real Estate as part of the Apopka Commerce Center transaction ($84.25M, $154/SF), a 4-building industrial complex supporting pharmacy and supply chain. The clinical campus serves rapidly growing northwest Orange County. Primary care is the dominant MOB demand driver, followed by pediatrics and family medicine. Satellite MOB concentrates on US-441 south of downtown Apopka and SR-436 toward Altamonte. The combination of AdventHealth’s active campus and population growth makes Apopka a viable MOB investment target at below-replacement-cost basis.
The largest structural demand driver for new MOB absorption in Orlando, one that is invisible in standard market statistics, is the private equity consolidation of physician practices. Since 2018, private equity has systematically acquired independent physician practices, aggregating them into platforms that are eventually sold to health systems, larger PE funds, or public investors. The real estate dimension: when PE acquires an independent dermatology practice leasing 2,500 SF on a month-to-month basis at $18/SF full-service gross, the first action is to negotiate a formal NNN lease of 7\u201310 years at $26\u2013$32/SF, a structure that makes the lease portable, auditable, and valuable in the platform's eventual exit. This lease institutionalization is a direct NOI event for MOB landlords.
The most PE-consolidated medical specialty. Major platforms in Orlando include Forefront Dermatology, Advanced Dermatology and Cosmetic Surgery, and US Dermatology Partners. These platforms lease 1,500–3,500 SF per location at $22–$32/SF NNN. Standard: 7–10 year NNN lease with 3% annual escalations, guarantied by the platform entity. For a landlord, a dermatology platform signing 7-year NNN at $28/SF in 2,000 SF is a $2.35M present value at 6.0% cap.
GI practices require 3,000–6,000 SF including exam rooms, procedure suite (infusion chairs, endoscopy prep/recovery), and front-end scheduling. PE platforms include GI Alliance, Gastro Health (formerly US Digestive Health), and Digestive Health Associates. They pay $24–$34/SF NNN for procedure-capable suites, a premium reflecting HVAC (air exchange rates above standard), plumbing, and electrical capacity (1,200+ amps per floor).
Among the largest-footprint MOB tenants, 4,000–10,000 SF per location including X-ray suite, casting room, and PT gym. PE platforms include Resurgens Orthopaedics, Orthopaedic Care Partners, and Florida Orthopaedic Institute. PT chains include ATI Physical Therapy, NovaCare, and Athletico at 2,500–4,000 SF at $20–$28/SF NNN. Both specifically demand AdventHealth-adjacent locations for surgical referral capture.
Eye care platforms include EyeCare Partners, Eyecare Services Partners, and Vision Group Holdings. Requirements: 2,500–5,000 SF with optical lane infrastructure, low-light procedure capability, specialized plumbing for slit lamp equipment, and parking ratios of 5:1,000 or better. Platforms typically sign 10-year NNN leases with 3% annual bumps, among the most durable structures in the medical tenant universe.
Urgent care platforms include CareSpot (GuardianKind/Walgreens), Concentra (Humana subsidiary). They lease 2,000–3,500 SF at $24–$36/SF NNN. Primary care consolidation through One Medical (Amazon), Optum (UnitedHealth), and Oak Street Health (CVS) is producing institutional leases in 3,000–6,000 SF with 10-year NNN terms and Fortune 100 parent credit. A One Medical or Optum lease is functionally indistinguishable from a Fortune 100 tenant.
NNN (triple-net) leases dominate new MOB construction and most institutional MOB re-tenanting, meaning the tenant pays property taxes, building insurance, and maintenance costs directly, leaving the landlord with a predictable, expense-free income stream.
| Feature | NNN (Triple-Net) | Modified Gross | Full-Service Gross |
|---|---|---|---|
| Property tax | Tenant | Tenant (typically) | Landlord |
| Building insurance | Tenant | Tenant (typically) | Landlord |
| Maintenance | Tenant | Split, base year stop | Landlord |
| NOI predictability | Very high | Moderate | Low |
| Typical OpEx (NNN) | $7–$12/SF annually | Partial | $10–$16/SF landlord-absorbed |
| Healthcare REIT pref | NNN only | Sometimes | Never |
| Renewal risk | Low, clinical build-out invested | Moderate | Higher |
| Specialty | Typical SF | Lake Nona/SE | AdventHealth Adjacent | Secondary Suburban | Term | TI |
|---|---|---|---|---|---|---|
| Primary Care | 2,500–4,500 | $28–$36 NNN | $24–$32 NNN | $20–$26 NNN | 7–10 yrs | $55–$90 |
| Dermatology | 1,500–3,500 | $30–$38 NNN | $26–$34 NNN | $22–$28 NNN | 7–10 yrs | $60–$90 |
| GI (procedure) | 3,000–6,000 | $30–$38 NNN | $26–$34 NNN | $22–$28 NNN | 10–12 yrs | $75–$120 |
| Orthopedics + PT | 4,000–10,000 | $26–$34 NNN | $22–$30 NNN | $18–$24 NNN | 10–15 yrs | $65–$100 |
| Ophthalmology | 2,500–5,000 | $28–$36 NNN | $24–$32 NNN | $20–$26 NNN | 10 yrs | $70–$100 |
| Urgent Care | 2,000–3,500 | $32–$42 NNN | $28–$36 NNN | $24–$32 NNN | 10 yrs | $80–$110 |
| Cardiology | 3,000–6,000 | $28–$36 NNN | $24–$32 NNN | $20–$26 NNN | 10–15 yrs | $70–$110 |
| Oncology (infusion) | 4,000–8,000 | $30–$40 NNN | $26–$36 NNN | N/A (hospital adj only) | 10–15 yrs | $85–$130 |
| Life-Science/Lab | 3,000–15,000 | $35–$50 NNN | N/A | N/A | 5–10 yrs | $100–$180 |
| Behavioral Health | 800–2,500 | $22–$28 NNN | $18–$24 NNN | $16–$22 NNN | 3–7 yrs | $40–$70 |
The 2026 MOB market is a landlord's market near hospital campuses and a balanced market in secondary suburban locations. Physicians and practice managers should expect: NNN structure as the landlord's baseline demand (non-negotiable near campus), TI allowances at the lower end of the ranges above in high-demand corridors (landlords near Lake Nona are offering $65\u2013$85/SF and finding tenants), and lease terms of 10 years for procedure-capable spaces. Leverage physicians do have: term length (extending from 10 to 12 years unlocks better TI), pre-leasing new construction (developers offer lower face rents and higher TI for a signed lease before construction begins), and portfolio size (PE platforms with 3+ locations command better rates). Personal guaranty remains standard for independent practices; PE-platform guaranty replaces it when the practice is PE-owned.
The single most important economic fact in medical office leasing: a physician who relocates their practice loses 30–40% of their established patient panel in the transition. Patients do not always follow their doctor to a new location — distance, insurance network participation at the new address, referral relationships with nearby specialists, and patient inertia all create attrition. For a cardiologist generating $2.8M in annual revenue, a 35% patient loss equals $980,000 in year-one revenue destruction. The cost of relocating — new build-out, moving disruption, patient attrition, staff retention — typically exceeds 3–5 years of above-market rent savings. This is why MOB renewal rates run at 80%+ vs 50–55% for general office. The physician's economic incentive to renew, even at above-market rents, is overwhelming.
Clinical build-out is the physical manifestation of this captivity. A standard physician office suite — exam rooms, procedure room, waiting area, nurse station, private offices, medical gas lines, specialized plumbing — costs $85–$150/SF to build out, depending on specialty. A 4,000 SF dermatology practice with 6 exam rooms and a laser procedure room: $340,000–$600,000 in build-out. A 3,500 SF primary care office: $297,500–$525,000. A 5,000 SF orthopedic suite with digital X-ray prep rooms: $425,000–$750,000. This capital investment, which the landlord provides via TI allowance and the physician amortizes over the lease term, creates a switching cost that functions as the most reliable tenant retention mechanism in commercial real estate. The landlord who provides the TI upfront is buying a 10-year guaranteed tenant whose departure economics make early termination irrational.
Highest volume, most standardized — landlord-favorable TI economics
Laser infrastructure adds $40–$80K per suite; high-revenue, premium-payer specialty
X-ray room shielding, procedure space add significant capex; strong renewal profile
Stress testing rooms, echo lab, and specialized electrical requirements; longest leases
Biosafety requirements, infusion chair layout, negative pressure rooms — highest capex specialty
Lower build-out capex but strong demand; HIPAA sound attenuation adds cost
In NNN medical office leases, Common Area Maintenance (CAM) charges cover the shared costs of operating the building: parking lot maintenance, landscaping, exterior lighting, HVAC shared systems, elevator maintenance, security, common area cleaning, and property management fees. CAM is estimated at lease commencement and reconciled annually — each January, the landlord issues a CAM reconciliation statement showing actual vs. estimated charges. If actual CAM exceeded estimates, the physician owes the difference (a CAM true-up). If actual was lower, the landlord credits the overpayment against the next period's rent.
Physicians and their legal counsel should audit three elements in every CAM clause before signing: (1) CAM cap — negotiate an annual CAM increase cap of 3–5% per year to prevent runaway escalation on aging buildings; (2) Exclusions — ensure capital expenditures and management fees above 5% of gross revenue are excluded from CAM reconciliation; (3) Audit rights — insist on the right to audit landlord CAM records once per year within 90 days of receiving the reconciliation statement. Medical office landlords near hospital campuses typically have legitimate CAM structures — the properties are well-maintained and the tenant base sophisticated. Secondary suburban locations with older building stock may have CAM structures that require more scrutiny. Standard medical office CAM in Orlando runs $7–$12/SF annually for well-maintained suburban product.
The most compelling value-creation strategy in Central Florida CRE: buy distressed Class B office at $80\u2013$110/SF in University/436 (2.8 mi from AdventHealth), Airport/South OBT (4.1 mi from AdventHealth), or Altamonte (1.5 mi from AdventHealth Altamonte), spend $80\u2013$120/SF on clinical conversion, and exit at 5.5\u20136.0% MOB cap rate against $22\u2013$28/SF NNN. Gross value creation ranges from $150\u2013$250/SF.
Acquisition at $90/SF: $1,800,000
Clinical conversion capex at $95/SF: $1,900,000
Soft costs and carry (18%): $342,000
Total all-in: $4,042,000 ($202/SF)
Stabilized rent: $24/SF NNN \u00d7 20,000 SF = $480,000 GPR
Stabilized EGI (7% vacancy): $446,400
OpEx (15% of EGI, NNN mgmt only): $66,960
Stabilized NOI: $379,440
Exit at 5.75% MOB cap: $6,599,000 ($330/SF)
Gross profit: $2,557,000
Gross return on all-in: 63% over 36-month cycle
Equity multiple (65% LTV bridge): approximately 2.2\u00d7
Approximate IRR (36 months): ~22\u201326%
Conversion geography is non-negotiable. The drive-time requirement is 5–10 minutes from hospital to office. University/436 buildings are 7–12 minutes from AdventHealth Orlando main. Airport/South OBT is 8–12 minutes from AdventHealth on SR-528. Altamonte Springs is 3–8 minutes from AdventHealth Altamonte on SR-436. Buildings outside these drive times convert to specialty tenants (behavioral health, PT, imaging) that generate lower rents and weaker exit cap rates.
Clinical build-out requires minimum 10-foot finished ceiling heights (12–14 feet preferred for imaging), electrical capacity above 200 amps per floor, plumbing risers accessible for medical sinks in every exam room, structural floor loading above 80 psf for radiology equipment, and fire suppression with accessible sprinkler risers. Commission a structural and MEP assessment before signing a PSA, $8,000–$15,000 prevents the $500,000 surprise.
Medical office parking requirements exceed general office by 30–50% because patients arrive with companion drivers (elderly, post-procedure sedation, pediatric with parents) and medical visits require longer parking durations. Minimum viable ratio: 4 spaces per 1,000 SF of leasable area, 5:1,000 preferred, commanding $2–$4/SF in additional rent. Parking-constrained parcels are significantly more difficult to lease to clinical tenants.
Target 40–50% pre-committed SF before breaking ground. Channels: (1) JLL Healthcare (Lucia Hedke, Micah Strader) for healthcare system expansions and physician practice groups; (2) CBRE Healthcare (Monica Wonus) for PE-backed practice platforms with multi-location growth mandates; (3) direct outreach to AdventHealth’s physician group development team, which actively assists hospital-affiliated physicians in finding satellite office locations near each campus.
Two calculators: the MOB valuation model for investors buying or developing credit-tenanted medical office, and the conversion IRR model for value-add buyers repositioning general office as medical space. All outputs update in real time.
Medical office building value is driven by the credit quality of the tenant, the structure of the lease (NNN vs gross), the remaining lease term, and the applicable cap rate. This calculator works from the practice's space and rent to the building valuation.
| Year | Rent/SF | Annual NOI | Building Value | Cumul. Income |
|---|---|---|---|---|
| 1 | $28.00 | $88,725 | $1,478,750 | $88,725 |
| 2 | $28.84 | $91,518 | $1,525,300 | $180,243 |
| 3 | $29.71 | $94,395 | $1,573,247 | $274,638 |
| 4 | $30.60 | $97,358 | $1,622,631 | $371,996 |
| 5 | $31.51 | $100,410 | $1,673,498 | $472,406 |
| 6 | $32.46 | $103,553 | $1,725,890 | $575,959 |
| 7 | $33.43 | $106,791 | $1,779,854 | $682,750 |
| 8 | $34.44 | $110,126 | $1,835,438 | $792,876 |
| 9 | $35.47 | $113,561 | $1,892,688 | $906,438 |
| 10 | $36.53 | $117,099 | $1,951,656 | $1,023,537 |
Key Insight: A Primary Care practice leasing 3,500 SF at $28/SF NNN on a 10-year lease with Regional PE Platform credit generates $88,725/year NOI. At a 6.00% cap rate, this lease supports a building value of $1,478,750 ($423/SF). The TI investment of $245,000 amortizes over 10 years at $24,500/year.
Healthcare REIT Buyers: Healthpeak Properties (PEAK, formerly Physicians Realty Trust/DOC) targets 5.5\u20136.0% going-in cap on hospital-affiliated physician NNN MOBs. NNN Healthcare Office REIT targets 5.75\u20136.25% for 10+ year NNN. Healthcare Trust Inc. targets 5.5\u20136.5% for clinical NNN. All require 85%+ occupancy, NNN structure, minimum 7 years remaining term.
Models the full conversion cycle, acquisition, clinical capex, lease-up, stabilized hold, and MOB exit, against holding as distressed general office. Three corridor quick-fills load current market assumptions.
⚠️ DSCR of 0.90\u00d7 is below 1.20\u00d7. Reduce LTV or increase target rents.
Key Insight: Converting $90/SF Class B/C office near Orlando Main (University/436) to medical use at $202/SF all-in produces a $392/SF MOB exit, a 1.82\u00d7 equity multiple and ~9.3% approximate IRR over 7.5 years. Holding as distressed general office exits at approximately $119/SF. The conversion premium is worth $272/SF per square foot converted.
Pre-Lease Sensitivity: At 42% pre-committed tenancy: conversion financing risk is Low. Most bridge lenders require 40%+ pre-lease for maximum proceeds. Your 42% pre-lease qualifies for standard bridge lending at full proceeds.
Medical office cap rates in 2026 span a 250-basis-point range from on-campus hospital-affiliated NNN at 5.0\u20135.25% to secondary conversion at 6.75\u20137.5%. The premium at the tight end reflects the combination of credit quality, lease term, and location.
| Asset Type | Location | Tenant Credit | Cap Rate | Buyer | Lease | Notes |
|---|---|---|---|---|---|---|
| On-Campus Health System | On hospital land | Health system (IG) | 5.0–5.25% | Healthcare REIT, life co | Absolute NNN, 15–20yr | Healthpeak/NNN Healthcare primary |
| Off-Campus Health System NNN | Within 1 mi | Health system/PE credit | 5.25–5.75% | Healthcare REIT, institutional | NNN, 10–15yr | AdventHealth/Nemours affiliate |
| Credit PE Platform | AdventHealth-adj | National PE derm/GI/ortho | 5.5–6.0% | Healthcare REIT, CBRE buyer | NNN, 10–12yr | Platform guaranty = institutional credit |
| Stabilized MOB (Ind. Group) | Primary suburban | Ind. group (3+ physicians) | 5.75–6.25% | Institutional private | NNN, 7–10yr | Renewal probability 80%+ |
| New Development Stabilized | Lake Nona / AH campus | Mix | 5.5–6.25% | Healthcare REIT, institutional | NNN | Nona Medical Center comp tier |
| Value-Add / Partially Leased | Hospital-adj corridors | Mix | 6.25–7.25% | Value-add private | Mix NNN/modified | Active lease-up or conversion |
| Conversion, Just Stabilized | Near AH (not campus) | Mix | 6.5–7.25% | Private, acq fund | NNN (newly structured) | 12–24 mo history preferred |
| Secondary Suburban MOB | Non-campus suburban | Independent | 7.0–8.0% | Local private | Modified NNN/gross | Smaller buyer pool |
Teal bars vs gray bars make the cap rate premium visible: medical office trades at 100\u2013200 basis points tighter than equivalent general office at every credit tier. On-campus health system NNN at 5.125% vs Class A general office at 6.5%, 137 basis points of additional value. At $10M scale, 150 basis points equals $2.0M in additional exit value on identical NOI. This is what physician captivity, NNN structure, and healthcare REIT demand create: a permanent, quantifiable premium that general office does not offer.
Medical office is the only commercial real estate asset class with a dedicated institutional buyer pool — healthcare REITs — whose entire business model is built around acquiring and operating MOB. This creates a structural demand floor for stabilized, credit-tenanted medical office that general office does not have. Understanding who these buyers are and what their acquisition criteria look like is essential for anyone underwriting a MOB exit.
Medical office consistently trades at 150–250 basis points tighter than equivalent general office at every credit tier. The spread is not random — it reflects three durable structural advantages: (1) physician captivity producing 80%+ renewal rates vs 50–55% for general office tenants; (2) NNN structure eliminating operating cost exposure for the landlord; (3) healthcare REIT demand creating a permanent institutional bid floor that general office lacks. On-campus health system NNN at 5.0–5.25% vs Class A general office at 6.5–7.0% is a 150–200 bps spread. Off-campus PE-backed specialty at 5.5–6.0% vs Class B suburban office at 8.0–9.0% is a 200–300 bps spread. Secondary suburban MOB at 7.0–8.0% vs distressed Class B/C office at 8.0–11.0% compresses toward parity only at the lowest credit tier — and even then MOB maintains a 50–100 bps floor advantage from renewal probability alone.
The occupancy gap between medical and general office is driven by a single economic fact: physician tenants cannot move their practice without losing 30–40% of their patient base in the transition. A cardiologist’s patient panel is built over years through hospital referrals, insurance network listings, and geographic proximity. Moving that practice breaks the geographic accessibility, may disrupt the hospital referral relationship, and requires the physician to notify every active patient. The operational disruption costs a practice $100,000–$300,000 in lost revenue and administrative expense. For most practices, the financial cost of moving exceeds the savings from a lower rent. This captivity produces renewal rates of 80–85% (vs 50–55% for general office) and the vacancy rates that sustain MOB occupancy through economic cycles that devastate general office markets.
The $723M committed to Lake Nona hospital construction, AdventHealth’s $423M cancer care hospital and adjacent MOB (delivering 2026) and Nemours Children’s Health’s $300M expansion covering 110,000 SF hospital addition plus 75,000 SF patient care and 75,000 SF administrative space (delivering 2028), generates satellite MOB demand through a predictable mechanism: when a hospital adds specialty clinical capacity, the physicians who use that hospital for inpatient and surgical care need satellite offices within 3–5 miles for outpatient follow-up. The cancer care hospital specifically generates demand for oncology, hematology, radiation oncology, palliative care, and cancer rehabilitation practices. The Nemours expansion generates pediatric specialty satellites. Both demand streams lag the hospital opening by 12–36 months. The investor who acquires or develops MOB within 3 miles before those satellites open will be positioned to lease to the exact tenant profile the hospital creates.
Absolute NNN leases obligate the tenant to pay all property-level expenses without exception, property taxes, building insurance, all maintenance, and all capital expenditures including roof replacement and structural repairs. The landlord receives rent and nothing more. This is the lease structure that Physicians Realty Trust, NNN Healthcare, and Healthcare Trust exclusively target for acquisition. Modified NNN (commonly double-net or NN) keeps the landlord responsible for roof and structure, a meaningful obligation for clinical buildings with specialized MEP systems and HVAC that typically require $150,000–$300,000 in capital replacement over a 15-year period. At the same stated cap rate, an absolute NNN asset is worth materially more than a modified NNN asset. When negotiating lease terms in 2026, establish absolute NNN as the baseline. Every basis point of landlord capital exposure that modified NNN introduces represents a cap rate adjustment of 25–50 bps on exit value.
Private equity consolidation of physician practices is the largest structural change to the medical tenancy market. The mechanism: an independent dermatology practice on a month-to-month tenancy at $19/SF full-service gross is acquired by PE. The PE platform’s operations team immediately initiates a real estate audit, reviewing every lease for term, structure, and market alignment. Month-to-month tenancies are institutionalized to 7–10 year NNN leases at market rents. Below-market leases are renegotiated. Gross leases are converted to NNN. Each action is a NOI event for the landlord. For the broader MOB investment market, PE consolidation is converting a fragmented, credit-thin physician tenancy landscape into an institutional one: instead of 100 solo physicians on month-to-month gross leases, we have 20 PE platforms on 10-year NNN leases with Fortune 500-tier parent guaranties.
Medical office building construction costs are among the most expensive in CRE, $430–$1,000+/SF depending on clinical complexity. A general primary care clinic needs standard commercial finishes at approximately $430–$550/SF. A GI procedural suite with endoscopy rooms, recovery bays, and specialized HVAC is $600–$750/SF. A radiation oncology suite with structural shielding is $800–$1,000+/SF. For the conversion strategy, the relevant benchmark is clinical build-out capex: standard clinical suite (exam rooms, reception, waiting) runs $80–$120/SF. Procedure-capable conversion (GI, infusion) runs $120–$180/SF. Imaging-ready conversion (X-ray with basic shielding) runs $150–$220/SF.
Three healthcare REITs are the primary institutional buyers: Physicians Realty Trust (DOC, merged into Healthpeak Properties/PEAK in 2024), historically the most active healthcare REIT acquirer of off-campus physician NNN MOBs nationally, paying 5.5–6.0% going-in cap rates for 10+ year NNN leases; NNN Healthcare Office REIT (non-traded, focused on outpatient facilities) at 5.75–6.25% cap rates with a Florida allocation; Healthcare Trust Inc. (non-traded, broad healthcare NNN mandate) at 5.5–6.5% caps. All three require: stabilized occupancy (85%+), NNN or absolute NNN structure, minimum 7 years remaining term, institutional-grade tenant credit, Phase I ESA within 12 months, and property condition report.
TI allowances in medical office are higher than general office because clinical build-out is more expensive. In the Orlando MOB market in 2026: primary care and general specialty (dermatology, behavioral health) at $55–$90/SF; procedure-capable suites (GI, minor surgery, infusion) at $80–$120/SF; imaging-capable suites at $100–$150/SF. These are substantially higher than general office $30–$50/SF TI, but the medical TI is mitigated by the lease term it buys: a $90/SF TI on a 10-year NNN lease amortizes at $9/SF/year, which is less than the $12–$15/SF NOI lift that medical rents generate over equivalent general office rents. The amortization math almost always favors providing the medical TI.
Yes. Industrial property in Orlando inland averages approximately $0.06/SF annually. Medical office buildings run $0.35–$0.65/SF due to: higher interior finish values ($80–$150/SF replacement cost), medical equipment replacement coverage, professional liability umbrella coordination, and higher construction replacement cost ($430–$700/SF vs $80–$140/SF for industrial). However, the inland Orlando advantage is real: coastal Florida MOBs frequently face E&S market placement at 30–50% above inland rates. An inland Orlando MOB built post-2002 can typically qualify for admitted market insurance with wind mitigation discounts of 15–40%. Budget $0.40–$0.60/SF annually for stabilized clinical MOB insurance.
| Contact | Firm | Specialty | Best For |
|---|---|---|---|
| Lucia Hedke | JLL Healthcare | MOB leasing, tenant + landlord | AdventHealth pre-leasing; health system tenant relationships |
| Micah Strader | JLL Healthcare | MOB investment sales | Healthcare REIT introductions; off-campus physician NNN acquisitions |
| Monica Wonus | CBRE Healthcare | MOB leasing + investment | PE-backed practice platform tenants; conversion pre-leasing |
| David Murphy | CBRE Orlando | MOB investment sales | Broader CRE investment including MOB; institutional buyer relationships |
| John Huguenard | JLL Capital Markets | Capital markets | MOB construction financing; bridge-to-perm for conversion |
| Julia Silva | JLL Capital Markets | Capital markets, financing | Bridge lending for conversion; perm placement post-stabilization |
| Rick Colon | Cushman & Wakefield | Institutional investment | Larger MOB portfolio dispositions; health-system sale-leaseback mandates |
Primary buyers: Healthpeak Properties (PEAK, formerly Physicians Realty Trust/DOC, merged 2024); NNN Healthcare Office REIT (non-traded); Healthcare Trust Inc. (non-traded). For sale-leaseback mandates: CBRE Healthcare Capital Markets and JLL Healthcare Capital Markets have active Florida health-system relationships. AdventHealth and Orlando Health both have ongoing sale-leaseback programs for non-core owned medical office assets.
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Institutional-grade data. Updated monthly from primary sources.
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