The Los Angeles medical office market, which includes Orange County, has seen robust sales activity in recent months, though rent growth remains subdued. According to a recent report, investor demand for medical office properties remains strong, but economic pressures are keeping rental rates in check.
Key Trends in the Orange County Medical Office Market
1. High Demand for Medical Office Properties
Despite broader economic uncertainty, medical office buildings (MOBs) continue to attract investors due to their stable tenant base and long-term leases. Healthcare services are essential, making MOBs a recession-resistant asset class. In Orange County, well-located properties near hospitals and major healthcare systems are particularly sought after.
2. Sales Activity Remains Strong
Transaction volumes for medical office spaces in Southern California have been steady, with institutional buyers and private investors competing for high-quality assets. Cap rates have remained relatively low, reflecting strong demand. However, rising interest rates have slightly tempered deal flow compared to the peak of 2022-2023.
3. Limited Rent Growth Ahead
While demand is strong, rent growth has been modest due to economic headwinds. Many healthcare providers are facing higher operational costs, making aggressive rent increases difficult. Landlords are focusing on tenant retention by offering flexible lease terms and property upgrades rather than pushing for higher rents.
4. New Development Faces Challenges
Construction costs and financing hurdles have slowed new medical office developments in Orange County. Those projects that do move forward are typically affiliated with major health systems or located in high-demand areas like Irvine, Newport Beach, and Anaheim.
What This Means for Orange County Tenants & Investors
- Tenants: Now is a good time to secure favorable lease terms, as landlords prioritize occupancy over rent hikes.
- Investors: Medical office properties remain a stable investment, but buyers should focus on well-located assets with strong tenant covenants.
- Sellers: The market remains favorable for those looking to divest, with continued interest from buyers.
Looking Ahead
While the Orange County medical office market remains active, rent growth is expected to stay moderate in the near term. Investors and healthcare providers should stay informed on market trends to make strategic decisions.
For the latest listings and market insights, visit Orange County Medical Space.
