Q4 2025 Healthcare Real Estate Industry Report

Macroeconomic Highlights

The broader macroeconomic environment reflected a gradual normalization following the volatility of recent years, providing a steadier backdrop for real estate performance across multiple sectors. Capital markets conditions showed modest improvement as lenders became more active and transaction activity slowly began to reemerge, even as borrowing costs remain elevated relative to earlier cycles. At the same time, development pipelines across many property types remain constrained due to high construction costs and tighter financing conditions, limiting new competitive supply and supporting occupancy and rent growth within existing portfolios. 

Structural demand drivers also continued to support sector fundamentals. Persistent housing affordability challenges have sustained demand for cost-effective living options such as manufactured housing, while demographic trends—particularly the rapid growth of the aging population—are increasing demand for healthcare services and related real estate. Combined with improving capital markets conditions and limited new supply, these trends have contributed to resilient property performance and stable operating fundamentals as the industry moves further into 2026. 

Inflation and the 10-Year Treasury Since 2022

Inflation and the 10-Year Treasury Since 1962

Q4 2025 Healthcare REIT Data Overview

Q4 2025 Healthcare Real Estate Operating Fundamentals

Healthcare Real Estate Lease Rates

Leasing activity across healthcare real estate remained strong during 2025, particularly in outpatient medical. Healthcare Realty Trust executed 5.8 million square feet of leasing during the year, including 1.6 million square feet of new leases, with a weighted average lease term of nearly six years. Annual escalators across leasing activity averaged 3.1%, lifting the portfolio average to 2.9%, while cash leasing spreads reached 3.7% in the fourth quarter. The company also highlighted several major health system transactions, including 15 lease extensions with Baptist totaling nearly 170,000 square feet for eight additional years, three new Baptist leases totaling 25,000 square feet with a blended term of 10 years, a 154,000-square-foot eight-year renewal with Tufts Medicine, and three lease extensions with Advocate Health totaling 142,000 square feet for an average of seven years. 

Healthpeak Properties also reported strong leasing activity in outpatient medical, completing 4.9 million square feet of leasing in 2025, including 1 million square feet of new leasing, while achieving 5% cash releasing spreads on renewals. In life science, the company completed nearly 1.5 million square feet of lease execution during the year, including 562,000 square feet of new leasing, and reported an additional 100,000 square feet of leasing activity under LOI or in execution since year-end. 

In senior housing, both Welltower and Ventas continued to experience strong rate growth due to needs-based demand and disciplined pricing strategies. Ventas reported 4.7% RevPOR growth in its SHOP portfolio as dynamic pricing balanced occupancy and rate strength, with both move-in rents and in-house rates rising year-over-year . Welltower’s senior housing operating platform saw RevPOR growth of 5.1%, supported by strong pricing power and ongoing occupancy gains that amplified revenue growth across its U.S. and U.K. portfolios . These combined trends reflect a quarter where landlords across medical office, life science, and senior housing regained clear rate-setting power. 

Medical Office REITs – NOI/Occupied SF (MOB Same Store)

Healthcare Real Estate Occupancy

Occupancy improved across several healthcare portfolios as leasing absorption and tenant retention supported steady gains. Healthcare Realty Trust reported that same-store occupancy increased by more than 100 basis points during the year, including more than 20 basis points in the fourth quarter, supported by nearly 290,000 square feet of same-store absorption. Tenant retention remained strong at 82% for the year and nearly 83% in the quarter, marking the eighth consecutive quarter above 80%. The company also reported that leased percentage at redevelopment properties increased by 1,000 basis points since the end of the third quarter. 

Healthpeak Properties ended the year at 91% total occupancy in outpatient medical and 77% total occupancy in life science, with the Gateway acquisition reducing life science occupancy by more than 150 basis points. In senior housing, Welltower reported another quarter of roughly 400 basis points of year-over-year occupancy growth, while Ventas reported 300 basis points of year-over-year occupancy growth in the fourth quarter and said its U.S. senior housing portfolio remains only 86% occupied.  across the combined DOC + Physicians Realty Trust platform . 

Medical Office REITs – Period Ending Occupancy (MOB Same Store)

Healthcare Real Estate Income & Expenses

Property-level income growth across healthcare REIT portfolios remained solid, supported by leasing spreads, occupancy gains, and operating leverage. Healthcare Realty Trust reported same-store NOI growth of 4.8% for the full year and 5.5% in the fourth quarter. The company also achieved $10 million of run-rate G&A savings, reduced annual G&A expense to $45 million, and improved property NOI margins by 60 basis points. Healthpeak Properties reported total portfolio same-store cash NOI growth of 4.0% for the full year and 3.9% in the fourth quarter, with outpatient medical same-store growth of 3.9% for the year. 

Senior housing posted materially stronger operating growth. Welltower reported 20.4% same-store NOI growth in its senior housing operating portfolio and 15% same-store NOI growth across the total portfolio, supported by 9.6% same-store revenue growth, 400 basis points of occupancy gains, 0.8% expense-per-unit growth, and 270 basis points of margin expansion. Ventas reported 15.4% SHOP NOI growth in the fourth quarter, driven by 300 basis points of occupancy growth, 4.7% RevPOR growth, and 180 basis points of margin expansion to over 28%. 

Medical Office REITs – YoY Revenue Growth (MOB Same Store)

Medical Office REITs – YoY Expense Growth (MOB Same Store)

Medical Office REITs – YoY NOI Growth (MOB Same Store)

Healthcare Real Estate Investment & Transaction Activity

Capital allocation remained active across healthcare real estate, with portfolio repositioning and senior housing investment driving activity. Healthcare Realty Trust completed $1.2 billion of asset dispositions at a blended 6.7% cap rate, exiting 14 noncore markets as part of its portfolio repositioning strategy. The company also emphasized redevelopment within its existing outpatient medical portfolio, targeting approximately 10% yields on cost. 

Healthpeak Properties completed $325 million of outpatient medical asset sales at approximately a 6% cap rate and recycled capital into new investments, including a 1.4 million-square-foot campus in South San Francisco and the $314 million acquisition of a joint venture partner’s 46.5% interest in a 3,400-unit senior housing portfolio. Senior housing investment activity was also substantial at the larger healthcare REITs. Ventas completed $2.5 billion of senior housing acquisitions in 2025 and had already closed more than $800 million early in 2026, while Welltower completed nearly $11 billion of net investment activity in 2025 and had $5.7 billion of acquisitions completed or under contract in the first six weeks of 2026. 

Medical Office REITs – Aquisition Dollar Amount History

*Excludes Healthcare Realty Trust merger with Healthcare Trust of America, for $7.75 billion in Q2 2022

Healthcare Real Estate Cap Rates & Bid-Ask Spread

Transaction pricing in healthcare real estate remained firm, particularly in outpatient medical. Healthcare Realty Trustc ompleted $1.2 billion of dispositions at a blended 6.7% cap rate, while HealthpeakProperties completed $325 million of outpatient medical asset sales at approximately a 6% cap rate. Those disposition levels indicate continued investor demand for stabilized outpatient medical assets despite broader capital market volatility. 

Private-market demand for outpatient medical also remained strong in management commentary. Healthpeak Properties said private-market demand is driving down cap rates in outpatient medical, while Healthcare Realty Trust said outpatient medical transaction volume increased significantly in 2025. Both companies paired asset sales with internal reinvestment, including redevelopment programs targeting approximately 10% yields on cost at Healthcare Realty Trust.

Medical Office REITs – Implied Cap Rate History

*The implied cap rate data indicates the market value of each REIT.   

The implied capitalization rate is a culmination of the company value and total debt of each company divided by its NOI. 

Medical Office REITs – Enterprise Value History

Headwinds in the Healthcare Real Estate Market

The clearest near-term pressure point remained life science. Healthpeak Properties guided to 2026 same-store NOI growth of down 5% to down 10% in the lab segment, driven by lost occupancy, lower base rent, additional operating expense, and capital required to re-lease vacant space. Management also said earnings will lag any underlying recovery because it takes time to build leasing pipeline, sign leases, complete build-outs, and commence rent. 

Capital market conditions also remained a constraint on external growth for some portfolios. Healthcare Realty Trust said its current cost of capital and discount to intrinsic asset value limit external growth, which is why near-term capital allocation remains focused on redevelopments, stock buybacks, and selective joint ventures rather than broader acquisition activity. 

Tailwinds in the Healthcare Real Estate Market

Outpatient medical demand remained supported by the ongoing shift in care delivery toward ambulatory settings. Healthpeak Properties said the outpatient sector is benefiting from the move to lower-cost, more convenient outpatient settings, including support from CMS allowing more surgeries to be performed in outpatient settings. Healthcare Realty Trust said demand in the top 100 MSAs continues to outstrip supply, that completions as a percentage of inventory remain near all-time lows, and that robust investment by health systems in outpatient services continues to support leasing demand. 

Senior housing fundamentals also remained supported by demographic demand and constrained supply. Ventas noted that only about 2,500 new senior housing units were started in the fourth quarter of 2025, while more than 2 million people are expected to turn 80 in 2026, and the 80-plus population is expected to grow 28% over the next five years. Welltower also said demand is highly visible as the 80-plus population continues its rapid growth, while new construction remains at trough levels because long-term interest rates and construction costs remain elevated. 

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