In the last issue, I asked what exactly qualifies as healthcare real estate. This week, that question gets expensive. Because before someone can tell you the vacancy rate, absorption, value or performance of "medical office," they first have to decide which buildings count.

And the industry doesn't use one definition.

Before a vacancy rate is a statistic, it's a definition.

Vacancy itself is real. But the reported market vacancy rate depends on which properties were included in the inventory being measured.

NCREIF's Medical Office subtype definition sets the bar at 90%: office buildings "in which 90% or more of the occupied space is leased to medical tenants."

JLL's 2025 Medical Outpatient Building Perspective describes medical tenancy, or space built out for it, as "typically 50-70%" and says a property typically has 70% or higher medical tenancy to be perceived as an MOB at sale.

CBRE starts from purpose: buildings "constructed for, or renovated to, house patient care outside of hospitals."

Transwestern's Q2 2025 national medical office report compiles properties "10,000 SF and larger."

Four respected sources. Four different doors.

The point isn't which one is right. Change the definition and you change the dataset. Change the dataset and you can change the vacancy rate, absorption, comparable universe and the story an owner or investor thinks the market is telling them.

The problem isn't necessarily bad data. Different datasets can be answering different questions, and a market statistic is only useful if you understand what the market being measured actually includes.

A hypothetical. Not a client, not a real building.

Imagine a fully leased 40,000-SF building in Charlotte. 24,000 SF clinical. 8,000 SF wellness. 8,000 SF traditional office.

Is it medical office?

Under whose definition?

Clinical tenants hold 60% of the space, or 80% if the wellness suites count as medical. Either way, that falls short of the 90% line in NCREIF's Medical Office subtype definition. At 60%, it falls within the medical-tenancy range JLL says is typical of MOBs — but JLL's description also considers space built out for medical tenants. Whether it would be perceived as an MOB at sale, where JLL says properties typically have 70% or higher medical tenancy, depends on how the wellness suites get read. CBRE's description asks what the building was constructed or renovated for, which a rent roll can't answer. At 40,000 SF it clears Transwestern's size floor easily. A 3,000-SF clinic in a strip center would not.

Same building. Four different readings.

Nothing on your rent roll moves when the definition does. What moves is which statistics actually describe you.

So the owner's question isn't which definition is correct. It's which definition sits behind the market statistics being used to evaluate your building.

Why care which category you get compared against? Because the categories don't necessarily move alike. Green Street's September Commercial Property Price Index puts healthcare property values roughly 8% below their 2022 peak versus roughly 33% below for office. That healthcare figure blends medical office with senior housing, skilled nursing and life science. Treat it as a signal about categories, not a medical office reading.

When someone quotes you a vacancy rate, absorption figure or comp set, ask:

Some reports tell you exactly what went into the denominator. Others give you the number without enough context to know whether your building belongs in it.

Before that number influences a real estate decision, know which one you're reading.

Don't just read the number. Read the method behind it.

For Q1 2026, CBRE's U.S. medical outpatient figures, covering its 59 tracked markets, reported 511,000 SF of positive net absorption. Cushman & Wakefield's June announcement of Vital Signs 2026 put first-quarter MOB absorption at 3.8 million SF across the top 50 U.S. markets.

Same quarter. Same label. More than seven times apart.

Two respected research firms can report dramatically different U.S. absorption numbers for the same quarter without either number necessarily being wrong. They are clearly not reporting identical market universes: CBRE tracks 59 markets while Cushman's figure covers the top 50. Other rules (inventory criteria, building size or tenancy requirements) may differ as well, but neither document provides enough property-level inclusion criteria to explain the gap, so I won't guess at the cause.

When an offering memorandum cites MOB vacancy, absorption, rent growth or cap rates, ask who produced it, for which geography and period, what qualified, and whether that universe resembles your property.

The research isn't unreliable. Market data without its method can create false precision.

Some uses clearly sit inside established medical definitions — NCREIF's medical tenant definition covers medical, dental and psychiatric outpatient care.

Others are less obvious: PT, chiropractic, med spas, aesthetics, longevity, recovery, IV therapy, fitness and wellness hybrids, and other cash-pay concepts. That NCREIF document doesn't name med spas, IV therapy, chiropractic or physical therapy.

Whether your business shows up in a given dataset can depend on the service you deliver, how your tenancy is classified, the property type and whose research it is.

That ambiguity is becoming more important as healthcare and wellness move into smaller, consumer-facing retail locations.

And that creates another question: what happens when one of the fastest-changing parts of healthcare real estate isn't being counted where we expect to find it?

Not software. A free PDF from NCREIF.

Before you start with the vacancy rate, start with the definition. If your property doesn't qualify for the dataset, the market statistics produced by that dataset may not describe your building. Find Medical Office under the office section and hold your rent roll up against it. It won't tell you how other firms count.

When I look at a Tampa Bay healthcare market report, I don't just want the vacancy number. I want to know what went into the denominator.

Does the dataset capture a smaller PT clinic in a shopping center? A converted dental office? A med spa? An outpatient clinic occupying former retail?

The next generation of healthcare real estate may be growing outside some of the datasets we traditionally associate with MOB. Ask the same thing wherever you own.

Healthcare operations taught me to ask what a report counted before I decided what the number meant.

We have spent years getting better at measuring healthcare real estate. But measurement only works when we're clear about what belongs in the category.

Healthcare delivery changed. Where care happens changed. Who occupies the space changed.

If the denominator hasn't changed with it, the number can be perfectly accurate and still tell an incomplete story.

The issue is not that the data is wrong. The issue is whether yesterday's category definitions are capturing today's healthcare delivery model.

And next week, I'm looking at the tenants most likely to fall through that gap.

Before you refinance, sell or reposition a healthcare property, let's understand how the market is viewing the asset — not just what the sign calls it.

Schedule a 30-minute Strategy Session with me and get a complimentary BOV of your asset: calendly.com/leigh-a-brower

Until next week,

Leigh A. Brower
Fractional Chief Real Estate Officer
The Next Gen Dev | The Wellness Edition

The Next Gen Dev — Wellness Edition is your weekly briefing on the strategies and frameworks that separate wellness businesses building the future from those stuck in the past.