Medical and life sciences investors and developers continued to curb activity in the first half of 2025 as they held out for the promise of reduced interest rates. Additionally, increased construction costs slowed medical outpatient building and life sciences development. The period of slower construction activity among these two asset types should benefit occupancy rates and rent returns, which will attract investors and bolster sales prices as interest rates continue to drop.

Key Takeaways

• Life sciences venture capital deals trended larger but fewer as investors are willing to pay a premium for faster exit times

• The slower pace of medical outpatient building construction boosted occupancy and revenue per occupied square foot

• The hospital construction pipeline increased as many delayed projects for expansions and renovations are underway

• Elevated interest rates and cap rates continued to suppress hospital and medical outpatient building transactions