Health care practices have a variety of requirements when leasing medical office space. Whether the office space will provide clinical, diagnostic, laboratory, or other services, healthcare providers’ needs differ drastically from the needs of ordinary office tenants. Though finding an appropriate medical office space can be challenging, qualified medical office real-estate brokers can streamline the process and save you time and money!
Here are 11 essential issues to consider when reviewing spaces and negotiating leases for medical office space:
1. Cost: Though the sticker price (in other words, the rent) of an office space is the most obvious aspect of a space’s affordability, consider other factors that will increase real-estate expenditures. For instance, if you’re leasing an ordinary office space for conversion into a medical space, it is important to account for conversion costs, which may be quite high. These costs may be enough to deter you from converting a traditional office space, especially since the conversion costs may not pay off in the long run; conventional office spaces lease for shorter periods of time than medical spaces do, and opportunities for renewal may be limited.
2. Accessibility: Depending on the nature of the practice, the office space must be in a location accessible to patients. Visitors with serious illnesses or physical handicaps must be able to easily make their way to the space, or they may simply decide to seek help elsewhere. Consider whether the space you’re looking at already has enough wheelchair ramps, elevators, electronic doors, and other accessibility amenities. Planning to add a practice’s own accessibility features may be more costly than anticipated, and may not even be very helpful, especially if accessibility aids might be relegated to inconvenient locations in or around the building.
3. ADA Compliance: Because accessibility requirements for medical offices are strict, as per the Americans with Disabilities Act, anyone seeking medical office space should look for a location that already meets as many of the stringent requirements as possible. Because installation of ADA-compliant accessibility amenities may be expensive, as discussed above, it is important for tenants to try to negotiate lease terms that place at least some of the costs of ADA compliance on the landlord.
4. Parking: Usually, it’s a good idea to have a lot more parking space for a medical office than for an ordinary office: experts estimate that a medical office should have five parking spaces per thousand-unit of square footage inside. Also consider proximity; the office should have a convenient drop-off area adjoining a closely located parking lot.
5. Improvements: Traditionally, landlords require that any improvements or changes to the building be made by contractors that they know and trust. Because medical office spaces have unique improvement requirements, you will have to communicate clearly with the property owner about introducing new contractors specialized in building medical facilities. The landlord will retain the right to access the space as demolition and remodeling takes place, in order to check in and verify that the value of the property is not negatively affected by the remodel.
6. Biohazards: Another deterrent to owners of conventional office spaces may be biohazards; the office will probably generate and dispose of biohazardous waste, regardless of the type of medical practice. Furthermore, the office might require installation of machinery that presents radiation risks, such as X-ray machines and and CT scanners. In such cases, special shielding will need to be installed, and landlords may balk at the magnitude of such modifications, especially since shielding modifications are not usually covered in standard office space leases. Therefore, be aware that the lease for a conventional office space will have to be negotiated in detail, which may delay the process and incur legal fees.
7. Use: Matters such as improvements, biohazards, and ADA compliance, discussed above, will almost certainly fall outside the range of standard lease language. To prevent lease violations, avoid boilerplate leases and conceive of a lease adapted to the specific needs of the tenant with a medical practice.
8. After-hours Access: Many conventional office-space leases limit access to standard business hours (8-5). However, medical practices frequently see patients during extended hours, or operate 24 hours a day. Be sure that the lease specifies access terms appropriate to the needs of the medical practice, and also ensure that the lease language specifies exactly how, and to whom, responsibility for utilities costs will be allocated.
9. Landlord Access: Usually, conventional leases allow landlords the right to enter any part of the space at any time to make sure that it is being used properly. However, medical practices must ensure the privacy of their patients, so lease language should specify a protocol by which the landlord may access the leased space without violating patient confidentiality. The landlord should expect access to the space by appointment or during certain hours, but the lease language should be clear and sensitive enough that the needs of both tenant and property owner are fully addressed.
10. Exclusive Use Provisions: Because competition among healthcare providers can be stiff, tenants should negotiate lease terms that prevent the landlord from leasing adjoining or proximal office space to identical but competing medical practices. For instance, if the office space is located on an office strip or in a building with multiple suites, a competing medical practice should not be able to set up shop in the same strip or building. That said, make sure that the lease language is very specific regarding what a competing practice consists of, as the presence of a complementary medical establishment might be beneficial, or even desirable.
11. Find a Qualified Broker: In the search for medical office space, it is best to start out with a lease broker with proven experience negotiating for medical offices or facilities. These brokers will be better suited to negotiating complex lease terms that account for exclusive use provisions, landlord access, after-hours access, biohazards, ADA compliance, and accessibility installations. Qualified brokers will streamline the leasing experience and will help secure a lease that fully benefits your medical practice.
The list above is only a few of the considerations when leasing medical office space. It’s important that healthcare providers engage the right team to find the right space and to review and negotiate all the terms and conditions that will allow them to operate their practice.
If you need help finding and leasing medical office space don’t hesitate to contact us!
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