Medical Office Building Loans for Practices and Investors
Sticky tenants, specialized build-outs, and recession-resistant demand make MOB a lender favorite. We match practices and investors with the right capital.
Why Medical Office Is One of the Stickiest Asset Classes
Medical office buildings behave differently from standard office. Healthcare tenants sign long leases, invest heavily in specialized build-outs they cannot easily walk away from, and serve demand that holds up in any economy. That tenant stickiness makes MOB one of the most financeable property types in commercial real estate. Lenders evaluate tenant credit, lease term remaining, proximity to hospitals or health systems, and the reusability of the medical build-out. CapitalAx works with two kinds of MOB borrowers: physician groups buying the building their practice occupies, and investors acquiring leased medical office. Owner-occupied practices often get the best terms through SBA 504, which allows as little as 10% down and a long fixed rate. Investors with credit-tenant buildings reach conventional and CMBS programs. Demographics keep working in the sector's favor as an aging population drives sustained demand for outpatient care, imaging, dental, and specialty clinics.
Borrower Profiles
- Physician groups buying their practice building
- Dental and specialty practice owners
- Medical office investors and syndicators
- Healthcare systems acquiring outpatient sites
- Developers of new outpatient and clinic space
Loan Structures
- SBA 504 for owner-occupied medical practices
- Conventional bank loans for leased MOB
- CMBS for credit-tenant medical buildings
- Bridge financing for lease-up or repositioning
- Construction loans for new outpatient facilities
Underwriting Notes
- Tenant credit and health system affiliation
- Weighted average lease term remaining
- Reusability of specialized medical build-out
- Proximity to hospitals and referral base
- Practice financials for owner-occupied deals
Common Challenges
- High tenant improvement costs for medical build-outs
- Re-tenanting difficulty for specialized space
- Reimbursement changes affecting practice revenue
- Concentration risk in single-tenant buildings
- Longer lease-up for new outpatient developments
Why CapitalAx
Medical office rewards lenders who understand healthcare, not just square footage. CapitalAx works with SBA 504 lenders for physician-owned practices and conventional, CMBS, and bridge sources for MOB investors. We know how to present tenant credit, health system affiliation, lease term, and the reusability of specialized build-outs so lenders see the stability that makes medical office one of the most fundable property types in commercial real estate.
Frequently Asked Questions
What makes medical office space stickier than regular office?
Healthcare tenants pour money into specialized build-outs, imaging rooms, plumbing for dental and surgical suites, and lead-lined walls that would be expensive to rebuild elsewhere. That sunk cost, plus an established patient base tied to the location, keeps tenants in place for long terms and drives high renewal rates. Lenders reward that stability with better terms than they offer on conventional office, where tenants move more freely.
Should my physician group buy our building with SBA 504?
For most owner-occupied practices, SBA 504 is the strongest option. It funds the real estate with as little as 10% down, a below-market fixed rate, and a 25-year term, which frees up cash for the practice while building equity in the property. You need to occupy at least 51% of the building. Groups that want to lease extra suites to other providers can still qualify while renting out the balance.
How do lenders underwrite a leased medical office building for investors?
Investors are underwritten on tenant credit, lease term remaining, and the strength of the location relative to nearby hospitals and referral sources. A building anchored by a hospital-affiliated group on a long lease reaches conventional and CMBS terms. Buildings with shorter leases or independent practices draw more scrutiny on renewal risk and the cost to re-tenant specialized space if a provider leaves.