Philadelphia’s medical office investment market is showing signs of improvement in 2026. Although leasing remains soft, investment activity has strengthened noticeably.

The first quarter delivered the strongest start for medical office sales since 2022. As a result, investor confidence appears to be returning to the sector.

Medical office transactions totaled approximately $80 million during the first quarter. Consequently, annual sales volume reached $212 million, representing a 30% increase year over year.

Pricing also moved higher. Transaction values increased 3.4% from the previous quarter to approximately $135 per square foot.

Private investors drove much of the activity. In fact, they accounted for roughly 65% of all medical office transactions.

Meanwhile, healthcare systems and owner-users represented about 22% of sales volume. Their continued participation has helped support pricing for well-located properties.

Several recent transactions highlight where demand is concentrating. For example, Children’s Hospital of Philadelphia acquired a medical office property at 501 South University Avenue for $17.5 million.

The acquisition equates to approximately $253 per square foot. Additionally, the property sits just a half-mile from CHOP’s main campus in University City.

CHOP plans to redevelop the 2.3-acre site as part of its long-term expansion strategy. Therefore, institutional demand continues supporting values in land-constrained locations.

Investor interest also remains active in the suburbs. Earlier this year, Cornerstone Companies acquired Stone Manor Corporate Center in Warrington for $17.2 million.

The sale achieved approximately $275 per square foot. Likewise, the transaction demonstrates continued demand for stabilized healthcare assets in established suburban markets.

Despite stronger investment activity, leasing conditions remain challenging. Annual net absorption stayed negative during early 2026, reflecting ongoing occupancy pressures.

Furthermore, quarterly gross absorption remains below historical averages. Even so, investors continue targeting high-quality medical office properties with strong fundamentals and long-term demand drivers.

Taken together, recent transactions suggest the Philadelphia medical office market is regaining momentum. At the same time, investors remain focused on selective opportunities tied to healthcare growth and institutional demand.