Lower in profile than the four major commercial property sectors, medical outpatient buildings (MOBs) may outperform all of them. That’s the high-level conclusion of an analysis that examines MOBs’ risk-adjusted returns. “They deliver the highest return per unit of risk and exhibit shallow peak-to-trough drawdown,” writes Sophie Kim, Vice President of Investments at Rethink Healthcare Real Estate, in a recent white paper for Revista’s Rising Leaders Council, The Quiet Achiever: MOBs Deliver Superior Risk-Adjusted Returns.
Rethink arrived at this conclusion using NCREIF Property Index (NPI) data to measure returns, volatility and drawdowns across major property sectors to evaluate comparative efficiency. It then incorporated CBRE’s vacancy and Green Street’s NOI growth data to further assess the underlying fundamentals that support this stability.
The analysis found that over an 11-year period from the third quarter of 2014 to Q3 2025, MOBs’ annualized total return averaged approximately 6.6% while annual volatility was 4.2%, “significantly below any of the traditional core sectors,” Kim writes. Although industrial properties produced the highest absolute returns at about 12.4% over that time period, those returns were accompanied by 12.7% annual volatility, or three times that of MOBs.
“This contrast highlights two different paths to performance,” writes Kim. “Industrial has benefited from strong growth periods but has also experienced sharper corrections. In contrast, MOBs grew steadily, allowing returns to compound more efficiently over time.”
Using the Sharpe ratio as a yardstick in measuring the NPI data, MOBs outperform the core property sectors for excess return over volatility. Furthermore, this sector produces the highest income return: 15.8, compared to 6.2 for industrial, 10.4 for apartments, 9.4 for retail and 7.8 for office. It also ranks ahead of apartments, retail and office for its appreciation return-to-volatility ratio.
MOBs and industrial properties are closely matched in terms of downside resilience. Looking at NPI appreciation returns separately from income returns, Rethink found that MOBs experienced a peak-to-trough decline of roughly 13% with industrial exhibiting a slightly smaller decline. That compares to 37% for retail, 24% for office and 18% for apartments. “Even without the buffering effect of income, MOBs remain among the least volatile sectors in private real estate,” writes Kim.
A similar story is told through analysis of public-market performance between 2010 and 2024, as provided by Green Street. In comparing same-store NOI growth during that period, MOBs exhibited the lowest volatility at approximately 0.6% annually.
Stability is also a hallmark of MOBs when it comes to occupancy. The standard deviation of MOB vacancy is 1.3 percentage points, second only to apartments for this metric. For quarterly vacancy changes, MOBs are the most stable property type with a standard deviation of just 0.16 percentage points. “This smooth behavior reflects long-term tenancy, necessity-driven utilization, and disciplined development that limits abrupt shifts in occupancy,” Kim writes.
In conclusion, “Medical outpatient buildings are the quiet achievers of institutional real estate,” writes Kim. “They may not dominate headlines, yet they consistently deliver what matters most to investors: strong returns earned with remarkable consistency. Return is only half the equation; risk is the other half, and it is the steadiness of those returns that ultimately determines long-term efficiency.”
This publication is intended solely for informational purposes and should not be interpreted as investment advice. The author has not provided Revista with any compensation in connection with this posting. Revista may feature materials from its subscriber community, which could create an incentive for the platform to highlight certain types of content.
NPI data and CBRE vacancy data were provided courtesy of CBRE. Green Street’s NOI growth chart was provided courtesy of Heitman. While the information is believed to be accurate, no warranty is made as to its completeness or reliability, and readers are encouraged to conduct their own due diligence before making any investment decisions.
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