The Orange County medical office building (MOB) market has demonstrated remarkable resilience in the post-pandemic era, even as rising interest rates and economic uncertainty impact commercial real estate. With strong fundamentals, declining vacancy rates, and steady rent growth, the sector continues to outperform many other property types.

Strong Market Fundamentals

Orange County’s MOB market comprises approximately 10 million square feet, with a current vacancy rate of 8.5%—down 100 basis points since late 2022. Average full-service rental rates have climbed to $3.48 per square foot/month, a 9.3% increase from mid-2022.

Limited new construction and a significant portion of vacancies concentrated in older, outdated buildings have helped keep supply and demand in balance. While leasing activity has slowed compared to pre-pandemic levels, absorption remains positive, with a net gain of 75,200 square feet leased over the past year.

Challenges for Healthcare Providers

Healthcare organizations—from large hospital systems to independent practices—are still recovering from pandemic-related financial strain. Rising labor costs, staffing shortages, and tighter profit margins have led many providers to delay expansion plans and seek shorter, more flexible lease terms.

As a result, landlords are offering more concessions, including higher tenant improvement (TI) allowances and rental abatements, to attract tenants. With construction costs at historic highs, landlords willing to fund $100+ per square foot in TIs have a competitive edge—but often require longer lease terms to secure their investment.

Major Developments Reinforce OC’s Healthcare Hub Status

Orange County continues to see significant investment in new medical facilities, reinforcing its reputation as a leading healthcare destination. Several high-profile projects are underway, including:

• City of Hope’s 73-bed specialty hospital & 190,000 sq. ft. MOB
• UCI Health’s 144-bed hospital & outpatient center
• Hoag Hospital’s Irvine expansion (155 beds + 120,000 sq. ft. outpatient space)
• CHOC’s 190,000 sq. ft. Southwest Tower outpatient center
• Providence Health’s Mission Hospital expansion (100 new beds)

Combined, these projects represent over $5 billion in new healthcare construction, ensuring long-term demand for medical office space.

Looking Ahead: Stability & Growth

As healthcare providers stabilize their finances and patient volumes normalize, the MOB market is expected to strengthen further in the second half of 2023. While rising interest rates and inflation remain concerns, the sector’s essential nature and strong fundamentals make it one of the most resilient segments in commercial real estate.

For healthcare tenants and investors, Orange County’s medical office market continues to offer long-term stability and growth potential—even in an uncertain economic climate.

Find Your Ideal Medical Space in Orange County

Whether you’re a healthcare provider looking for space or an investor exploring MOB opportunities, Orange County Medical Space can help. Contact us today to learn more about available listings and market trends!

2024 has been a landmark year for UCI Health, Orange County’s only academic health system, as it transformed into one of the largest healthcare networks in California. Through strategic expansions, cutting-edge facilities, and a commitment to sustainability, UCI Health is bringing world-class medical care closer to the community than ever before.

A Major Expansion: The UCI Health Community Network

In March, UCI Health made history by acquiring four hospitals and associated outpatient locations from Tenet Healthcare Corporation, significantly broadening its reach. These facilities were rebranded as:

• UCI Health ― Fountain Valley
• UCI Health ― Lakewood
• UCI Health ― Los Alamitos
• UCI Health ― Placentia Linda

This acquisition added 858 beds, bringing UCI Health’s total capacity to 1,317 beds—a massive leap forward in serving more patients across the region.

“We are investing in building a healthier future for people that harnesses the power of advanced medicine with the convenience of care available close to home,” said UCI Health President and CEO Chad T. Lefteris.

UCI Health – Irvine: A $1.3 Billion Medical Complex Takes Shape

This summer marked the opening of the first two buildings at UCI Health – Irvine, a state-of-the-art medical campus under construction at Jamboree Road and Birth Streets.

1. Joe C. Wen & Family Center for Advanced Care

• Opened in April 2024
• 168,000 sq. ft. facility with 120 exam rooms
• Offers pediatric and adult specialty services
• Saw 500 patients on its first day

2. Chao Family Comprehensive Cancer Center & Ambulatory Care Building

• Opened in July 2024
• 225,000 sq. ft., five-story facility
• A “one-stop shop” for cancer care, featuring multidisciplinary teams, diagnostics, and outpatient surgery
• Treated 160+ patients on day one

A seven-story acute care hospital is set to open in 2025, further enhancing the campus’s capabilities.

New Rehabilitation Hospital Coming in 2025

In February, UCI Health broke ground on the UCI Health Rehabilitation Hospital in Irvine, a 68,000 sq. ft., two-story facility featuring:

• 52 beds, including a specialized acquired brain injury unit
• Dialysis & imaging suites
• Advanced therapy gyms
• Outdoor recovery spaces

This stand-alone hospital will provide critical rehabilitation services when it opens next year.

Cutting-Edge Imaging & Cancer Innovations

Advanced Imaging Technology

• In August, UCI Medical Center unveiled a 19,000 sq. ft. Outpatient Imaging Center with the latest diagnostic tools.
• The second floor houses a dedicated breast health clinic, offering mammography, ultrasound, and bone density screenings.

Pioneering Cancer Treatments

• First in Southern California to offer photon-counting CT scans, delivering higher-resolution imaging in less time.
• First NCI-designated cancer center in California to provide histotripsy, a noninvasive ultrasound treatment that destroys liver tumors in a single outpatient procedure.

Award-Winning Care & Sustainability Leadership

National Recognition for Excellence

• Vizient Inc. ranked UCI Medical Center among the top 5 hospitals nationwide for quality inpatient and ambulatory care.
• Four-star Medicare rating for patient experience.
• Gold Seal of Approval for Advanced Heart Failure Program from The Joint Commission.
• Baby-Friendly Hospital re-designation for outstanding maternity care.
• Gold Beacon Award for the Medical Intensive Care Unit (one of only three in California).
• 95/100 score on the Healthcare Equality Index for LGBTQ+ inclusive care.

Commitment to Sustainability

• Nation’s first all-electric Central Utilities Plant (CUP) at UCI Health – Irvine, reducing carbon emissions.
• 75% of gas-powered landscaping equipment replaced with electric alternatives at UCI Medical Center.
• Practice Greenhealth Awards, including the Emerald Award and Circle of Excellence in Climate & Energy.

A Bright Future for Healthcare in Orange County

With new hospitals, groundbreaking treatments, and a dedication to sustainability, UCI Health is setting a new standard for medical excellence in Orange County. As the system continues to grow, patients can expect more access, innovation, and compassionate care in the years ahead.

Looking for medical office space in Orange County? Explore listings on Orange County Medical Space today!