Medical Office Real Estate in San Antonio, TX

Cap rates for medical office properties in San Antonio vary by submarket, property class, and occupancy levels. The overall San Antonio market average cap rate is approximately 6.8%. 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.

San Antonio offers significantly lower entry costs and higher cap rates than Austin, making it attractive for yield-oriented investors. While Austin commands a growth premium due to its tech economy, San Antonio provides more stable cash flow driven by military, healthcare, and government employment. The two metros are increasingly connected along the I-35 corridor, and some investors view them as a single megaregion.

Military and defense spending is a foundational economic driver. Joint Base San Antonio employs over 80,000 military and civilian personnel, creating consistent demand for housing, retail, and office space. The cybersecurity sector that has grown around the military presence adds a technology-driven demand component that diversifies the tenant base beyond government contracts.