Healthcare Real Estate Report (Q1 2025)
As of Q1 2025, the average rental rate for medical office buildings (MOBs) in Atlanta stands at approximately $26.24 per square foot, reflecting a 3.4% increase from the previous year and supportive of the growing demand for healthcare real estate in the region. The trend of increasing rental rates is driven by low vacancy rates and the sustained demand for medical office space. Notably, rental rates for MOBs have been rising at a faster pace than those for general office spaces in some areas, highlighting the expansion of Atlanta’s healthcare sector and the increasing need for accessible medical facilities.
Metro Atlanta Medical Office Market
The Metro Atlanta medical office market continues to experience strong demand, with positive absorption trends persisting even during recent economic uncertainty. As a result, medical office buildings have maintained steady leasing activity and buyer confidence leading to a decline in vacancy rates. In Q1 2025, over 150,000 square feet of medical office space was absorbed, marking the fifth consecutive quarter of positive absorption.
- Vacancy rates in the medical office sector continued to decline, reflecting the sustained demand for healthcare facilities. As of Q1 2025, the vacancy rate stood at 9.6%, down from previous quarters, highlighting the market’s leasing strength.
- Some submarkets, such as Northwest Atlanta, recorded notably lower vacancy rates, with levels as low as 3.4%.
- The steady decline in vacancy rates underscores the resilience of the medical office sector, driven by strong demand and limited supply, particularly in high demand submarkets.
Medical Office Leasing Activity:
Medical office lease activity in Atlanta is driven by several key factors. The city’s rapid population growth, combined with an aging baby boomer demographic, has significantly increased the demand for healthcare services, prompting the need for more medical office space. Additionally, the healthcare industry is shifting toward outpatient and ambulatory care facilities to reduce hospital congestion and lower costs, further fueling demand for well-located medical offices near residential areas.
Leading healthcare systems such as Emory Healthcare, Piedmont Healthcare, and Wellstar Health System are actively expanding their networks, driving higher leasing activity as hospitals and private practices search for strategic locations. Meanwhile, the scarcity of premium medical office space, combined with escalating construction costs, is making leasing a more practical and cost-efficient alternative to new development. Another driving force behind medical office leasing is the growing preference for locations within mixed-use developments that offer retail, dining, and residential components, providing added convenience for patients. High-traffic areas such as Midtown, Buckhead, and the Northwest Atlanta corridor have become particularly desirable for medical tenants. While telemedicine has reduced the need for some in-person visits, many practices still require physical office space for diagnostics, procedures, and hybrid telehealth models.
Finally, strong investor interest in medical real estate has further bolstered leasing activity. Institutional and private investors view medical office buildings as stable, recession-resistant assets, leading to increased leasing opportunities in both new and existing developments. Collectively, these factors are driving strong demand for medical office leases in Atlanta, making it one of the most competitive and rapidly growing markets for healthcare real estate.
There are hundreds of business points in the selection process and lease negotiation that can become more important than the rental rate. At Bull Realty, our healthcare and medical office tenant representatives work closely with you to navigate your business goals. Our deep market expertise enables us to provide strategic guidance while ensuring your short- and long-term objectives are met—helping you secure the right space for your practice’s success and growth. For more information, reach out to us at www.bullrealty.com
Phillip J. Kelly O.D.
V.P. Healthcare Real Estate
Email: Phillip@bullrealty.com
Direct: 404-876-1640 x159
Brice Burns
Commercial Real Estate Advisor
Email: Brice@bullrealty.com
Direct: 404-876-1640 x158
