Three structural differences explain the performance gap. First, healthcare demand is demographic — driven by an ageing population with inelastic need for medical services — rather than economic, meaning it doesn't contract during recessions. Second, medical tenants cannot work remotely. Clinical presence is a regulatory and operational requirement, so the vacancy risk that has devastated general office since 2020 simply doesn't exist in the MOB sector. Third, the investment required by medical tenants to fit out and equip clinical space creates extremely high switching costs — relocating a medical practice means replacing all clinical infrastructure, which typically costs $80–$150/sf or more. This keeps tenants in place longer, which explains the 7–15 year average lease terms on quality MOBs and the sector's 91.1% occupancy in Q3 2025. The 10-year total return of 6% for MOBs, beating the NCREIF index at 4.9%, is a reflection of these structural advantages playing out consistently across market cycles.

Savannah has a disproportionately robust healthcare infrastructure for its population size. The $2 billion healthcare personal income economy is anchored by two major health systems — HCA Memorial (612-bed Level 1 Trauma Centre and regional referral centre for southeast Georgia and coastal South Carolina) and St. Joseph's/Candler (714 combined beds, presence in 30+ counties). Mercer University School of Medicine operates a four-year campus on-site at Memorial, creating medical education infrastructure that typically only exists in much larger metro areas. Both systems are actively expanding outpatient presence — which drives demand for medical office space across Savannah's residential corridors. Healthcare is also the city's top two private non-manufacturing employers, meaning the healthcare sector is structurally woven into Savannah's economic fabric in a way that doesn't exist in every market of this size. For investors, this means stable, growing demand underpinned by institutional health systems rather than fragmented physician groups alone.

Significantly higher and structurally different. Medical tenant improvement buildouts involve clinical plumbing (a minimum of one clinical sink per exam room), medical gas rough-in (oxygen, nitrous, vacuum where required), enhanced electrical for medical equipment, HVAC performance specifications for clinical environments, ADA-compliant exam room door widths and clearances, HIPAA-compliant check-in and consultation spaces, and in some cases negative-pressure isolation rooms and lead-lined walls for imaging. The national average for a medical office fit-out is $80–$150/sf depending on clinical intensity — versus $40–$80/sf for general office. In practice, this means MOB TI packages are negotiated with healthcare construction cost data in hand, not standard office benchmarks. Landlords who negotiate TI without this context tend to underfund the allowance, leading to tenant disputes and uncompleted finishes. For tenants, an advisor who understands medical build-out costs can negotiate TI allowances that actually cover the real expense — rather than leaving the practice to fund the gap from working capital.

Savannah MOB cap rates broadly track national benchmarks, adjusted for the specific tenant profile and location. On-campus MOBs with investment-grade health system tenants (HCA, St. Joseph's/Candler) on long-term NNN leases trade at the lowest cap rates — typically 6.0–6.5%, reflecting their bond-like income characteristics. Multi-tenant off-campus MOBs with stabilised physician group occupancy typically trade at 6.5–7.5%. Single-tenant specialist facilities (ambulatory surgery, dialysis, imaging) with national operator tenants and remaining lease terms of 10+ years attract strong 1031 exchange demand and can trade at 5.5–6.5% depending on tenant credit and term. Assets with lease rollover risk, value-add potential, or sub-institutional tenant profiles trade at higher cap rates, often 7.5–8.5%+. The $8.28/sf gap between existing MOB rents and new construction rents ($24.78 vs $33.06) represents a meaningful repositioning opportunity for owners of older, underrented product who are willing to invest in renovation.

Yes — and physician-owned real estate is one of the most tax-efficient strategies available to medical practices. A practice owning the building it occupies through a separate real estate entity can generate additional income (the building entity charges the practice market rent), build real estate equity, and create a significant asset that often becomes a meaningful component of the physician's retirement plan. The key decisions are: whether to buy an existing building and renovate, or build to suit; how to structure the ownership entity relative to the practice entity; and whether to purchase with partners or alone. RIVR provides the commercial real estate component of this decision — identifying suitable acquisition targets in Savannah's medical corridors, advising on build-to-suit feasibility, and executing the acquisition. We work alongside physicians' existing financial and legal advisors to ensure the real estate strategy integrates correctly with the overall practice financial structure.

+