| |
|
|
|
|
Bergen County
489 Medical Buildings
6,680,757 SF
RBA
$27.77 PSF
Base Rent |
|
Essex County
302 Medical Buildings
4,431,197 SF
RBA
$24.38 PSF
Base Rent |
|
|
|
Hudson County
200 Medical Buildings
3,929,569 SF RBA
$26.70 PSF Base Rent |
|
Middlesex County
500 Medical Buildings
6,607,000 SF RBA
$22.14 PSF Base Rent |
|
|
|
|
|
|
|
Northern NJ
3,313 Medical Buildings
45,862,007 SF RBA
$24.68 PSF Base Rent |
|
|
|
|
|
|
|
SALES
58,440 | $13,200,000 310 Madison Avenue, Morristown Buyer: Pentaurus Properties Seller: The Silverman Group
28,273 SF | $7,430,000 66 York Street, Jersey City Buyer: Sutton Management Seller: Lustbader & Lustbader | Hub Realty |
|
LEASES
6,277 SF 670 N Beers (Bldg.3), Holmdel
5,300 SF 381 Broadway Ave, Westwood
3,086 SF* 186 Rochelle Ave, Rochelle Park
2,411 SF* 7500 Bergenline Ave, North Bergen
*NAI Hanson Transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since early 2025, a number of policies and legislative actions have impacted
hospital systems and healthcare networks. These changes, coupled with
pre-existing financial pressures, are creating a challenging environment for
providers.
Financial and operational impacts The “One Big Beautiful Bill Act” has introduced changes to Medicaid,
including new community engagement (work) requirements, stricter
eligibility rules, and reduced federal funding. These changes are expected
to increase the number of uninsured individuals, resulting in higher rates
of uncompensated care for hospitals, particularly for rural and safety-net
providers. States are also facing funding constraints, which may lead them
to scale back or eliminate optional Medicaid benefits.
Medicare and commercial payer underpayments Hospitals continue to face a significant financial burden from inadequate
reimbursement rates from Medicare and Medicaid. According to a 2025
report from the American Hospital Association, these shortfalls are
worsening, increasing by an average of 14% annually between 2019 and
2023. Some Medicare Advantage plans are adding to the financial strain
through increased delays, denials, and underpayments.
Rising costs Hospitals are grappling with a “perfect storm” of rising costs, which
include increased staffing expenses stemming from workforce shortages
and the potential for higher prices on medical imports due to tariffs. One
survey found that 82% of healthcare experts expect tariffs to raise hospital
expenses by at least 15% over the next six months Department of Health and Human Services (HHS) overhaul The current administration has initiated a major reorganization of HHS,
consolidating divisions and regional offices. This action has faced criticism,
with some states suing the agency, claiming it has caused “irreparable
harm” by limiting access to essential programs. Other agencies, including
the CDC, have also experienced budget and staffing cuts.
Affordable Care Act (ACA) The ACA isn’t facing a full repeal effort, but its future remains uncertain.
Enhanced premium tax credits are set to expire at the end of this year,
which could significantly increase costs for many families. New regulations
are raising deductibles and making it more difficult to enroll in
marketplace plans. These changes could lead to decreased enrollment
and a weakening of insurance risk pools.
|
|
By the Numbers
Medical office buildings (MOBs) remain a strong investment in today’s
CRE market. These buildings have evolved from a niche investment to
a core asset class, offering a durable and reliable income stream, often
with long-term leases and resilience to market fluctuations. Key factors
contributing to their appeal? Lengthy leases secured by expensive
tenant buildouts and more financially stable tenants, like hospitals and
established care providers. The limited supply of new developments
also helps to maintain their value.
Other important factors for investors in 2025? - Pricing and capital costs: For prime, on-campus properties (often considered Class A
assets), trading remains competitive, with strong demand
supporting their value. A different scenario exists for off-campus
MOBs and other secondary assets, which are
experiencing greater pressure to reprice, reflecting a more cautious
approach from investors.
- Rising Conversions: In response to the growing demand for healthcare facilities, a
trend of converting existing spaces continues. This trend includes
transforming traditional office buildings and retail properties into
medical offices. The success of these conversion projects hinges
on several critical factors, such as the building’s structural integrity,
the capacity of mechanical, electrical, and plumbing (MEP) systems,
and the ability to secure necessary regulatory approvals.
- Continued growth in outpatient care: The healthcare industry’s ongoing shift toward outpatient
continues to drive demand for MOBs. The volume of care delivered
in these settings is projected to increase over the next decade. This
trend highlights the necessity for MOBs to be easily accessible
and equipped with modern technology. Properties in suburban
corridors with convenient patient access are well-positioned to benefit.
According to one report, MOB transaction volume hit $3.5 billion in H1 2025. Average PSF pricing increased 9% YOY; off-campus assets
averaged $351 PSF, which was 16% higher than on-campus PSF pricing. Transaction cap rates are hovering around the 7% range. Another
report notes that MOB sales slowed in Q2 2025, with a $1.52 billion sales volume; median price PSF increased $3 to $374. In general, healthcare
real estate, including MOBs, ACSs and surgical hospitals, remains a resilient sector in CRE in 2025.
A third market report finds that in H1 2025: • The operating margins of U.S. health systems increased by 1.1%. • MOB pricing decreased by 20.2% due to rising interest rates. • Occupancy across the 10 largest MOB markets is still high (Houston and New York report 94% and Philadelphia has reported 93% occupancy
rates). • From 2022 to 2024, private investors sold more MOBs than they purchased. During that same period, REITs and other institutional investors
were net buyers. In 2025, the trend has reversed, with private investors now increasing their overall medical property holdings for the first
time in five years. • In 2025, private investors comprised nearly 75% of total buyers — a significant increase from their 34% share in 2024. They’re also the
biggest sellers. Institutional sellers represent 14.2% of the seller pool YTD 2025. • REITs have reduced their acquisitions. So far in 2025, they’ve accounted for only 2.1% of medical property acquisitions, a 36.6% drop from
last year.
|
|
Here are the Q3 2025 statistics for New Jersey:
Northern NJ - 3,313 medical buildings
- 45,862,007 SF RBA
- $24.68 PSF base rent
Bergen County - 489 medical buildings
- 6,680,757 SF RBA
- $27.77 PSF base rent
Essex County - 302 medical buildings
- 4,431,197 SF RBA
- $24.38 PSF base rent
Middlesex County - 500 medical buildings
- 6,607,000 SF RBA
- $22.14 PSF base rent
Hudson County - 200 medical buildings
- 3,929,569 SF RBA
- $26.70 PSF base rent
What’s next?
The Trump Administration’s policies could impact academic medical centers (AMCs) in several different ways.
• Cuts to National Institutes of Health (NIH) funding and a new fixed reimbursement level for indirect costs could threaten research programs. • Proposed changes to Medicaid, including a shift to block grants and cuts to Medicare, could negatively impact AMCs, which serve a
significant population of uninsured and underinsured patients. • A focus on preventative care and cost savings may lead to new value-based care (VBC) models where reimbursement is linked to research
that improves population health. • Eliminating the preferential reimbursement for services provided at hospital outpatient departments (HOPDs) could have major financial
consequences.
Despite these challenges, some areas continue to see progress. Telehealth policies put in place during the COVID-19 pandemic have been
extended, and in some cases made permanent, particularly for behavioral and mental health services. There is also bipartisan support for the No
Surprises Act, which aims to protect patients from unexpected medical bills.
Overall, hospital systems and healthcare networks continue to navigate a complex, financially constrained environment marked by funding cuts,
rising costs, and a changing regulatory landscape. The policies enacted since 2025 are projected to increase the financial pressure on providers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teterboro, NJ | 201 488 5800 Parsippany, NJ | 973 463 1011 |
|
|
|
|
|
|
|
|
|
|
|
|
