Medical Office Real Estate in Boston, MA

Cap rates for medical office properties in Boston vary by submarket, property class, and occupancy levels. The overall Boston market average cap rate is approximately 5.0%. Class A properties typically trade at lower cap rates than value-add opportunities.

Healthcare demand is driven by demographics (aging population) and medical necessity rather than economic conditions. People require medical care regardless of the economic environment, and the shift toward outpatient care continues to accelerate. Medical tenants have long lease terms, high renewal rates, and significant buildout costs that make relocation unattractive. These factors combine to produce stable occupancy and rent collection even during economic downturns.

On-campus MOBs are located on or immediately adjacent to a hospital campus, benefiting from direct referral traffic, shared services, and the hospital system brand. They typically command lower cap rates (4.5-5.5%) due to perceived stability. Off-campus MOBs are standalone or in medical parks away from hospitals, typically trading at higher cap rates (5.5-7.0%) but offering potentially higher returns. Off-campus properties may have more diverse tenant bases and less dependence on a single health system.

Boston/Cambridge remains the dominant life sciences market globally, and long-term fundamentals are strong. However, the sector has experienced a correction from the 2021 peak as biotech funding moderated and significant new lab supply delivered. Kendall Square retains the most durable demand due to its irreplaceable proximity to MIT, Harvard, and the Broad Institute. Suburban lab markets along Route 128 and I-495 face more competition and longer lease-up periods.

The Seaport has matured from a speculative development play into an established mixed-use district with strong institutional ownership. New supply has slowed, and the neighborhood has developed a genuine community with residents, restaurants, and cultural venues. However, pricing reflects the maturation, and the district faces competition from emerging areas like Assembly Row in Somerville and Cambridge Crossing. Investors should underwrite for stable income rather than outsized appreciation at this stage.