Physician practices and healthcare providers usually remain in their leased office space longer than traditional office space users. Physicians must constantly compete for patients and they must look for new locations that attract new clients to their practice.
Dallas is experiencing increasing development of small medical office locations and patient care clinics to meet this demand. Physicians are considering locating into retail center close to established medical districts.
Healthcare providers traditionally lease medical office space for lease terms that are longer than other office space users. Because they have long term leases, doctors are not regularly looking for office space and this places them at a disadvantage because they are looking for medical office space less often than a traditional office tenant.
There are many office leasing standards that apply to both medical and traditional office users there are also unique issues and requirements that a Medical office space user should take into account.
The doctor's first move should be to hire a broker with knowledge in leasing medical office space. A qualified tenant representative will guide the medical practice toward the right space and office leasing transaction. The broker will have valuable knowledge of the medical office market, including office space that may not be common knowledge to a medical professional. The tenant representative will also know how to position the lease terms and requirements of the lease agreement to give the physician favorable lease terms.
Some Significant Lease Terms To Consider:
Relocation Clause: On occasion, a landlord will have another tenant that could be located in their building by relocating an existing tenant. The relocation clause usually gives the landlord the right to relocate a tenant. This practice could be detrimental for an office medical space user due to the extraordinary construction requirements for medical space.
Landlord Lien: Often a doctor may choose to finance equipment or other items necessary to practice. A landlord's lean could preclude the doctor's ability to get this financing.
Term: In order to amortize the higher construction expenses associated with medical office space the length of the lease term will generally be longer than a traditional office lease. A longer lease term of 7-10 years should equal higher tenant improvement allowances.
Death & Disability: Unfortunately we are all mortal and unplanned events occur. A clause should be included in the leae that gives a solo practitioner the ability to terminate their lease if the unforeseen occurs.
Architect & Contractor: A mistake can be avoided when the medical professional selects their own architect and contractor. The landlord will usually have their own and would like the tenant to utilzed them. The tenant needs to retain the right to decide if they want to use the landlord's architect and contractor or their own.
Ant Kick-back Laws: Federal anti-kickback laws create a special relationship between hospitals and properties that are owned by physicians. If there is a relationship between the medical practice and landlord compliance and proper documentation must be considered if a relationship exists.
Landlord Inspection RIghts: landlords have the right to inspect their property. Depending upon the time they choose to inspect the could disrupt a medical practice due to the sensitive nature of healthcare. This issue must be addressed in the lease so the landlord doesn't disturb the practice.
American With Disabilities Act: A medical office building is more likely to have visitors with disabilities than other office properties. Landlords will attempt to place the requirements for ADA compliance on the tenant. It is important that any ADA compliance issues or deficiencies are addresses by and the responsibility of the landlord.
Restoration of the Space: The lease will usually have a clause that addresses how repairs are to be addressed if a disaster occurs. It will outline who is required to perform certain tasks and a timeline. It is important to negotiate this clause so that the medical office space is operational as quickly as possible or that there is an ability to terminate the lease.
Use Clause: Medical practices are different than traditional office space users. They often have biomedical waste and hazardous materials on the premises. They also could generate radiation by using x-ray machines and other equipment. These issues must be addressed in the lease documentation to protect the medical practice.
The Healthcare provider normally executes a significant financial commitment when they sign a long term lease. Using the services of a qualified tenant representative will help them with the planning, location and lease agreement negotiation to get the best possible outcome for their practice.