Healthcare

Navigating a complex Healthcare real estate landscape

Portfolio strategies for a system under pressure – and on the move.

Outpatient growth, payer friction, constrained capital and new compliance obligations are reshaping where and how care is delivered. at JLL, we align network strategy aligns network strategy, portfolio design and capital markets so you can move faster with confidence.

 

Talk to a healthcare strategic advisory today

Portfolio decisions today are being driven by these 7 factors:

  • Outpatient is the growth engine.

    Health systems and corporate medical groups are leading an accelerating shift to care outside the hospital. Medical Outpatient Building (MOB) demand remains steady while occupancy is rising due to limited new, purpose-built supply. Sun Belt and high growth metros lead demand as systems pursue retail-like access strategies to serve growing populations. The Centers for Medicare & Medicaid Services finalized the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System (increasing average reimbursements by 2.9%), continuing support for ambulatory access and transparency measures and reinforcing outpatient viability.

  • Margins previously stabilized—but remain thin and volatile.

    While hospital finances had seen some recovery through early to mid-2025 due to improved volumes and efficiency, the extensive federal healthcare spending cuts of approximately $1 trillion through FY2034 mandated by OBBBA are expected to reverse these gains, impacting Medicaid, the ACA Marketplace, and Medicare. The existing national public health crisis of Emergency Department boarding, which worsens throughput, quality, and cost, creating near-term demand for psych/IOP/PHP sites and co-located behavioral access points, will likely be exacerbated by the financial strain on hospitals and potential cuts to optional Medicaid benefits like behavioral health services, despite the allocation of a $50 billion Rural Health Transformation Program.

  • Capital markets: cautious optimism for MOBs.

    Transaction volume (excluding entity-level transactions) for MOBs is on par with H1 2023 and H1 2024. Across CRE sectors, bid volume and debt and lenders quoting on transactions has increased. MOB cap rates have compressed 50bp in the last year, according to data from Revista. Investors have increased allocations to alternatives in the last few years, and the demographic drivers for MOB and relative stability compared to other sectors will continue, driving increased investor interest.

  • Payer dynamics tighten site of care economics.

    Medicare Advantage (MA) continues to expand its influence; MA plans made nearly 50 million prior authorization determinations in 2023, denying ~6.4%—a material administrative and cashflow headwind for providers building ambulatory networks.

  • Insurance coverage changes create real financial risk.

    The Medicaid “unwinding” removed 25+ million people from Medicaid by late 2024, increasing bad debt risk and sharpening the need for location decisions grounded in payer mix, eligibility churn, and access gaps.

  • Resilience, decarbonization, and state mandates add complexity.

    New guidance pushes hospitals toward zero operational carbon by 2030 with material facility and lease spec implications.

  • Cyber risk is a facilities level consideration.

    The 2024 Change Healthcare attack caused a financial impact for 94% of hospitals, forcing business continuity upgrades from IT rooms to redundant connectivity in outpatient sites.

What does this mean for healthcare leasing leaders?

Favor flexible occupancy over owned capacity. With margins and reimbursement under pressure, leasing preserves cash, accelerates market entry, and supports “test and learn” models for new service lines and payer geographies. JLL’s 2025 MOB perspective shows tight purposebuilt supply so a thorough understanding of the market and available options is key.

Let data (not only anecdotes) set the network. Combine demographics, growth, SDOH (Social Determinants of Health), claims/reimbursement, MA penetration/denial patterns, and drivetime analytics to prioritize micro markets with durable demand and profitable payer mix—especially where Medicaid churn and telehealth policies shift access.

Design for increasingly complex outpatient procedures. Outpatient platforms progressively require imaging power loads, procedure-ready exam pods, negative pressure options and behavioral pods or adjacent space for IOP/PHP as Emergency Department boarding spills into ambulatory settings.

Plan for sustainability at the lease level. New “green” specs (electrification readiness, energy metering, low carbon TI) and cyber/continuity requirements (dual fiber entries, generator interfaces) are becoming standard exhibits—alongside regional mandates like CA seismic and New York City’s Local Law 97

3 execution paths you can partner with JLL on

Number 1

Lease Existing Medical Space (On or Off-Campus

  • Investor: Stable rent from tight supply; credit backed leases with longer terms and optionality. Favorable MOB capital markets support yield.
  • Tenant: Fastest to market with minimal upfront capital. Ideal when customization is secondary to speed and cost control.
 

What to get right with JLL

  • Payer-informed trade area selection (MA denial maps, Medicaid churn).
  • Precise work letters for clinical Tenant Improvements (imaging, shielding, med gas).
  • Rent structures aligned to ramp-up or retail adjacency.
Number 2

Adaptive Reuse: Retail or Office Conversions

  • Investor: Rising conversion pipeline offers visibility and parking but requires upfront infrastructure investment.
  • Tenant: Good fit when medical space is scarce and visibility is key— But thoroughly examine upgrades and infrastructure suitability.
 

What to get right with JLL

  • Feasibility sprints (MEP, vibration, loading, ceiling height)
  • Co-tenancy planning (pharmacy, diagnostics, behavioral health)
  • Risk controls for schedule and cost variability.
Number 3

Developer Build-to-Suit/Ground Lease

  • Investor: Purpose built scale without ownership; forward leases and sale-leaseback potential position for cap rate compression.
  • Tenant: Best for clinical precision and long-term flexibility (modular bays, expansion rights) without owning the asset
 

What to get right with JLL

  • Competitive developer RFPs (cost discipline, guarantees, zero-carbon-ready design)
  • Capital structuring (credit tenant leases, synthetic leases, buy-backs, exit strategies)

Want to learn more about how JLL derisks and speeds up your ambulatory growth?

Download this guidebook now to gain further insights and get your own portfolio action plan.

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