Medical Office Real Estate in San Diego, CA

Cap rates for medical office properties in San Diego vary by submarket, property class, and occupancy levels. The overall San Diego market average cap rate is approximately 5.1%. 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 Diego has the highest concentration of biotech companies per capita in the US, anchored by the Salk Institute, Scripps Research, and UC San Diego. The Torrey Pines mesa has an unmatched cluster of research institutions within walking distance, creating a network effect that attracts talent and investment. Purpose-built lab space in this corridor commands premium rents and trades at cap rates often below 5%.

The military is San Diego's largest employer, with over 100,000 active duty and civilian personnel. This creates consistent demand for housing, retail, and services that is largely recession-proof. Areas near Camp Pendleton (Oceanside, Vista) and Naval Base San Diego benefit from steady housing demand. Defense contractors like General Atomics and Northrop Grumman also drive office and R&D space demand.