Life Sciences & MOBs: Persistent Demand Amidst Broader CRE Headwinds

By Majid Radaei, RadCRE · 2026-04-05 · Market Updates

Despite broader commercial real estate slowdowns, life sciences and medical office buildings (MOBs) continue to attract robust investment. Q4 2025 saw MOB transactions totaling over $4.5 billion, a testament to their recession-resistant appeal.

Resilience in a Shifting Landscape: Life Sciences and MOBs Remain Hot

While many commercial real estate sectors grapple with higher interest rates and economic uncertainty, the life sciences and medical office building (MOB) segments continue to demonstrate remarkable resilience and attract significant investor interest. This sustained demand is driven by demographic tailwinds, continued innovation in biotechnology and healthcare, and the defensive nature of these asset classes.

According to a recent report by JLL, investment in U.S. medical office buildings reached approximately $4.5 billion in Q4 2025, contributing to an annual volume just shy of $20 billion. This performance, while slightly down from the peak years of 2021-2022, still significantly outperforms traditional office and retail sectors, which have seen sharper declines in transaction volume and pricing. Cap rates for class-A MOBs in primary markets like Boston, San Francisco, and San Diego have largely held firm, remaining in the 5.5% to 6.5% range, reflecting investor confidence in their stable cash flows.

The life sciences sector, particularly lab space, continues its powerful trajectory, albeit with some market specific cooling in certain sub-clusters. CBRE reported that venture capital funding for life sciences companies, a key indicator of future demand for lab space, remained strong at over $30 billion in 2025. This funding translates directly into demand for specialized facilities. Major transactions include Blackstone's acquisition of a portfolio of lab and office buildings in Cambridge, MA, from BioMed Realty for an undisclosed sum in Q3 2025, further solidifying institutional commitment to the sector. Pricing for prime lab space in gateway markets can still command premium rents, often exceeding $100 per square foot, and vacancy rates remain historically low in innovation hubs.

Key Drivers & Market Dynamics

Several factors underpin the robust demand for these specialized assets:

• Demographics: An aging population in the U.S. and other developed nations ensures a growing need for healthcare services, which directly fuels demand for MOBs.
• Technological Advancements: Breakthroughs in biotech, gene therapy, and personalized medicine necessitate state-of-the-art lab facilities, driving the life sciences sector.
• Recession Resistance: Healthcare spending tends to be less cyclical than other consumer spending, making MOBs and essential life sciences facilities attractive during economic downturns.
• Specialized Nature: The high barriers to entry, including specialized infrastructure and regulatory complexities, limit new supply and protect existing assets.

However, not all submarkets are performing equally. Secondary life science markets, which experienced rapid growth during the pandemic, are now seeing some normalization in vacancy rates as supply catches up. Similarly, older, underequipped MOBs in tertiary markets are facing challenges with tenant retention and rent growth.

RadCRE Perspective

Majid Radaei, Founder of RAD Commercial Realty, notes: 'The persistent demand in life sciences and MOBs is not an anomaly; it's a structural shift underpinned by irrefutable demographic and scientific trends. We're advising clients to focus on asset quality and submarket fundamentals more than ever. The days of simply buying any lab space and expecting outsized returns are over. Investors need to be discerning, targeting properties with best-in-class infrastructure, strong tenant rosters, and located within established innovation clusters. For MOBs, it’s about strategic locations near major hospital systems and a clear understanding of reimbursement trends.

We're seeing an interesting dynamic where well-located, value-add MOBs that need moderate capital expenditure for modernization can offer superior risk-adjusted returns compared to fully stabilized, core assets with compressed cap rates. Leverage is still available at competitive rates for these asset classes, with bridge loans typically in the SOFR + 300-400 bps range for strong sponsors, and recourse agency debt for MOBs remaining attractive. For life sciences, non-recourse construction financing for spec lab development is tighter, demanding higher equity contributions and pre-leasing commitments, which creates opportunities for well-capitalized developers.' RadCRE's advisory desk is actively sourcing and underwriting opportunities in this niche, leveraging our deep ties with institutional lenders and a granular understanding of submarket specific demand drivers.

RadCRE continues to closely monitor these vital sectors, providing clients with data-driven insights and strategic advisory services across investment sales, financing, and capital structuring for life sciences and medical office assets.

Tags: life sciences real estate, medical office buildings, MOB investment, CRE capital markets, RadCRE, healthcare real estate, commercial real estate financing, lab space investment

Sources: JLL Research, CBRE Research, CoStar, GlobeSt, Commercial Observer