Commercial real estate owners and asset managers holding underperforming retail portfolios are repositioning square footage toward medical, dental, therapy, and wellness tenants to stabilize NOI and extend lease terms. With medical office occupancy at a decade high and new construction supply dropping 26% in 2026, landlords who can execute the conversion hold genuine pricing power. The core pain is operational: entitlement friction, TI cost complexity, and no playbook built for landlords who live on cap rates, not clinical workflows.
CBRE projects MOB construction completions will drop 26% in 2026 to the lowest level in over a decade, tightening supply just as demand climbs — giving converted retail landlords a rare window to fill that gap at premium rents.
Vizient's 2026 Impact of Change forecast projects outpatient care volumes will grow 20% over the next decade, driven by an aging population and migration of care to ambulatory settings — translating directly into durable demand for off-campus retail-adjacent clinic space.
Medical tenants sign 7-to-10-plus-year leases with 2-3% annual rent escalations baked in, versus shorter retail cycles — making them the stickiest replacement tenant a landlord with rollover risk can find in today's market.
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