In Medical Office Building Appraisal, commerical leasing expert witness Orell Anderson, MAI, of Bell, Anderson & Sanders LLC, writes:
There are three main topics that relate to the appraisal of Medical Office Buildings 1) the unique characteristics that differentiate them from standard office buildings; 2) the effects of hospitals and hospital proximity on MOBs, and 3) the current medical and political climate, which may alter some of the fundamental aspects of MOB appraisals.
UNIQUE CHARACTERISTICS OF MOBS There are many unique characteristics that differentiate a MOB from a standard office building. From an investor’s perspective, a well positioned and well-managed MOB represents a relatively secure investment opportunity, as there is always a demand for medical care. Of course, values of investment-grade properties vary, but within the Los Angeles area recent transactions of investment-grade MOB, have ranged from $120 per square foot to $220 per square not. This is significantly higher than standard office space, which often sells for less than $100 per square foot. Recent sales indicate sale prices ranging from approximately $2 million to over $12 million.