Underwrite a medical office building (MOB) like an office building with four extra tests: how tied it is to a health system, any hospital ground lease and its restrictions, the cost of specialized buildout if a tenant leaves, and how concentrated the rent is in one tenant. A spreadsheet or Titleman's underwriting from the rent roll, T-12 and OM builds the model; healthcare counsel and a healthcare market study fit better for regulatory and demand questions.
Updated 19 October 2026. Published by Titleman, which makes one of the tools compared.
How medical office differs from general office
The core method is the same as underwriting an office building: rollover, re-leasing cost, recoveries and capital. What changes is why tenants stay. Physicians invest heavily in suites and in a location patients know, so renewals are often more likely than in general office. Buyers pay for that; the tests below check it.
The extra tests
| Test | Questions to ask | Documents |
|---|---|---|
| Health system tie | Is the building on a hospital campus, connected or off campus? Which tenants are the health system or its affiliates, and on what terms? | Rent roll, leases, site plan |
| Ground lease | Who owns the land? Term left, ground rent resets, use restrictions, approval rights over new tenants or a sale, first-refusal rights | Ground lease |
| Specialized buildout | Imaging rooms, surgery suites, extra plumbing, backup power. Who owns it, and what does it cost to convert for the next user? | Leases, work letters, property condition report |
| Concentration | Largest tenant's share of rent; leases expiring in one window | Rent roll, lease abstracts |
| Regulation | Leases between a health system and physicians who refer to it generally need rent at fair market value; an outside review is common | Healthcare counsel |
A worked concentration example
For example, an illustrative 60,000 square foot building where a health system leases 33,000 square feet, or 55 percent of rent, with 5 years left. Physician groups lease the rest on shorter terms. If the health system does not renew, the owner faces, for example, 12 months of downtime on more than half the building and tenant improvement costs that run higher for clinical space than for general office. Put that window and its cost in year 5 of the cash flow.
What to ask the seller
- Renewal history: how many leases have renewed in the last ten years, and at what rent?
- Who paid for the buildout in each suite, and who owns it at lease end?
- Any ground lease consents needed for this sale?
- Recoveries: are leases NNN, modified gross or full service, and does the T-12 match?
Tools by job
| Option | Best for | What it does | Where it stops | Pricing model |
|---|---|---|---|---|
| Spreadsheet | A small MOB | Pro forma and a concentration table | Lease clauses keyed by hand | Staff time |
| Healthcare counsel and market study | Regulatory review and patient demand | Legal and demand opinions | Not an underwriting model | Per engagement |
| Titleman | A deal or loan request | Underwrites the property from the address, rent roll, T-12 and OM in live Excel | No legal or regulatory review | Per run; terms on a demo |
Where Titleman fits
Titleman's underwriting reads the rent roll and documents and returns a memo and a live Excel model in about 58 minutes at the median (production runs, 30 days to 18 October 2026). Ground lease clauses come from the documents you send; a lease abstract helps. The category: AI real estate underwriting software. Request a demo.
FAQ
Why do medical office tenants renew more often?
Their buildout is costly to replace and patients know the location. Check the building's own renewal history.
What is an on-campus medical office building?
One on or attached to a hospital campus, often on land the health system owns and leases to the building owner. Those ground leases can restrict uses, tenants and sales.
Is a health system tenant always a strong tenant?
Not automatically. Check which entity signed the lease, whether the parent guarantees it, and how core the clinic is to the system's plans.
Can Titleman review the healthcare regulatory side?
No. It underwrites the property from the documents and the address. Regulatory and fair market rent questions belong with healthcare counsel.