Medical office users and practitioners do not relocate typically to new spaces as often as general office and residential tenants. The competition to acquire new patients is increasing day by day. It is steering the medical practitioners to non-hospital properties since they are more conveniently located and are accessible by patients. The growth of the medical real estate is clearly demonstrated with the development of suburban medical office projects and the rise of urgent clinics in the metropolitan community. Heath care providers taking space in smaller community centers located near hospital campuses are a common sight. There are few things you should know before leasing a medical office building.
1. Use issues
Medical tenants or practitioners make use of hazardous materials that generates biomedical waste. Medical tenants use CT scans, X-Ray machines, and machines that generate hazardous radiation. Before hiring medical office building, you need to account for its usage in the lease document very clearly to ensure compliance.
2. After hour utilities
Medical tenants need to see patients even after the completion of normal working hours. Urgent care clinics operate 24 hours continuously and so it is vital to see how the after hour the owner caters to utilities. This can save unnecessary utility expenses.
3. Building’s compliance with ADA or Americans with Disabilities Act
Patients are more prone to have special needs than public. Buildings having health care providers receive ADA scrutiny. Pay special attention to the American with Disabilities Act clause within the lease document.
4. Landlord inspection
Commercial leases give property owners the right to re-enter your office premise to show the premises to prospective tenants, and for compliance inspection with the lease. They can even enter to make some infrastructural repairs. However, it is your jobs not to allow them enter examining rooms and restricted areas number of hours in the day. Do not allow the proprietor to check your patient’s record.
5. The anti kickback issues
Ant-kick back laws create some special needs for leases between properties and medical tenants. Properties can be of the physician’s or may be hospital owned and you must address proper documentation and proper compliance if the relationship between the property owner and tenant exists.
6. Medical Office Building6. Following the exclusivity provision
There is a term called exclusivity provision that means an exclusive use provision whereby the proprietor clearly states not to lease any other space to any party during development as the intended use of the property can be in direct competition with the tenant’s use of the building space. For medical office space, it is wise to look for the exclusivity provision for specific specialty practice.
7. Provision of death and disability
If you are a solo practitioner then look for death and disability clause in the agreement that provides for the ability for cancelling the lease in case of physician unable to practice due to disability and death. The clause must be sought after in the agreement. You can successfully negotiate the provision in the agreement. This will prevent the proprietor from saying that the insurance company must cater the tenants’ need.
8. Tenant improvement
Be aware of the repair and maintenance cost of the office. Nowadays, even the simplest repair and maintenance cost may be $50 to $60. The building may require milling, plumbing, and the need for equipment compliance creates extra cost.
9. Relocation provision
Office leases do comprise of provisions whereby the proprietor may shift the medical practitioner or the medical office tenant from one location to another. Try to resist such provisions of moving on to substitute premises. The tenant may have special build out needs, which may not be catered to by substitute premise.
Lien rights offered to the proprietor must always be subordinate to Tenant’s lenders when it comes to purchasing medical equipment. There is the cost of medical leasehold improvements and it is the physician who often finances the costs, which moves far beyond the landlord’s allowance.
Look for the restoration provision in the agreement paper very clearly. It addresses the rights of tenants and landlords and their individual responsibility in the restoration of obligations at the end of the lease.
By following the above tips while leasing a medical office building, one can avoid several nuances.
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