Updated: Apr 30, 2019
What Landlords and Medical Practitioners Must Consider When Leasing Medical Office Space
Medical office space users tend to remain in the same location for a significant period. Therefore, it is crucial that the physician carefully selects the property they are considering leasing not only for their but also with consideration for their patients.
Medical tenants lease space for terms that often exceed seven to ten years. Medical office leases have a much longer duration than the traditional office tenant that leases for a three to a five-year term. Because of the extra time, it is essential for both the landlord and tenant to consider the differences between a traditional office lease and a medical office lease.
Several important consideration of lease matters that will produce positive results:
1. Broker: It is paramount that the client selects a professional medical office broker that can help them with the leasing of their space. The competent broker is aware of the market and the types of transactions that are occurring in the submarket that the medical building is competing in for either tenant or against other properties.
2. Exclusivity Provisions: This limits the Landlord's ability to lease additional spaces to tenants that have similar uses to tenants in the property. As a tenant, this clause is necessary because it limits competition to your medical practice in the building.
3. Death & Disability Clauses: This clause is of importance to a medical professional because it would allow them to terminate the lease in the event of an unfortunate tragedy.
4. Landlord Inspection & Privacy: When patients visit their doctors some visitors may have physical limitations that would require compliance with the American with Disabilities Act. Because doctors occupy medical space, there is a higher possibility of a complaint or an ADA inspection by local authorities.
5: Anti Kick-back issues: If a physician or a hospital owns a property it can create compliance requirements for the lease to medical professionals. Coherence with the regulations and proper documentation needs addressing if there is a tenant-landlord relationship.
6. Compliance with Americans with Disabilities Act: Facilities designed for medical use there is a high probability that disabled patients may visit the property and the tenant's space. It is crucial to understand who is responsible for compliance with the Americans with Disabilities Act for the building's common areas and the tenant's premises.
7. Hazardous Materials: The practice of medicine often requires the use of dangerous substances and the generation of biomedical waste. CT Scans, X-rays and other equipment may produce radiation. The lease document must take into account these activities and protect the landlord and tenant so that it is clear who is responsible for these contaminants and materials.
8. After Hours Access: Often medical practices have after hour s visitations by their patients. It is essential to clearly define how the securing of the building after hours and how patients may gain access.
9. Tenant Improvements: The building of the typical medical office space can range from $75 - $105 per foot in today's market. Usually, there is a need for the above standard items such as, lead walls, extra plumbing and electrical and sometimes HVAC and lighting. Higher construction expense for the tenant's space creates additional considerations to take into account. Some of these items include landlord lien rights, relocation clause, renewal rights, and restoration obligations.
10. Heating Ventilation and Air Conditioning: Because medical practices are different from traditional office space it is essential for the doctor to know the hours of operation for the building and determine if patients come after these hours how they may activate the HVAC system and are there and after hours charge.
A good strategy will gain the best results finding, negotiating or leasing medical office space, it is essential that you have a professional real estate advisor to help you. Strategic planning and negotiation skills will help you achieve the outcome you desire.