Medical Space Needs – A Leasing Perspective
Submitted by A. Smith
Medical office tenants require a unique set of space requirements and lease terms. Operationally, medical office tenants must play by a separate set of rules that govern how things like hazardous materials, biomedical waste, patient confidentiality, compliance with occupational safety standards, and facility conditions are monitored and managed. All of these items need to be considered when entering into a lease for medical office space.
Physically, medical office tenants will often need to make extensive renovations to any space they choose to lease. Beyond simply finding a good location and a space that is sized to meet a physician’s needs, the type of building construction, the services provided by the landlord and other physical attributes of the property (number of parking spaces, presence of elevators, size of common areas in the building, etc.) should all be considered before determining a suitable spot to locate their practice. Requirements for plumbing, handicap accessibility, acoustics, airflow, etc. will further dictate the extent to which a space is modified.
Economically, the up-front tenant improvement costs can range from $40/SF – $200/SF, depending on the existing conditions of the space, as well as the equipment and finishes the tenant wants to have installed. There are typical reoccurring costs associated with base rent, operating expenses, taxes and insurance. However, things like medical waste disposal, high utility usage and more comprehensive janitorial contracts for medical office tenants can far exceed the costs that a typical office tenant will incur.
Keeping all of this in mind as various buildings and spaces are being evaluated can be cumbersome. To protect their interests, medical office users should seek the guidance of an experienced tenant representative who specializes in medical office facilities. The tenant representative can assist by making sure that the tenant is considering all of these variables and comparing apples to apples. Once a site is selected, the tenant representative can then advise and negotiate business terms to meet the client’s space needs and insure the continued health of the medical practice.