With anyone looking for space, in any industry, there are key issues that can make or break the decision and doctors looking for real estate, is no exception. With medical there are specific issues to evaluate at the onset and one must be ready to understand how each of these impact the final outcome of the practice.
This is my top 5 list of difficult decisions that a medical practice or healthcare service needs to contemplate prior to beginning their search for their medical practice location.
Parking and transportation are vital to the medical practice. Why? Well for one reason, the clients must be able to park and or take a bus or train easily. The second reason pertains to personnel. Those that work for the medical practice must also have a place to park and/or be able to take affordable transportation to work. So the bottom line is that it is important to understand what the code is within the geographic area you plan to serve and how patients/ employees can get to and from your office. On top of that, with medical users, the proper ADA access must be available as well and easy for the patients to navigate. For example, in Huntington Beach, CA the code is 6 parking spaces for every 1,000 SF. While in Culver City, CA, the code is only 3 spaces per 1,000 SF. So the question is, be sure the buildings you are scouting and the area you are targeting has the parking and transportation necessary to insure you have a healthy practice! (No pun intended!)
2. Deciding on Medical vs Non-medical Building
Depending on your practice you need to decide what type of property you would like to be located in. Some doctors depend on others for referrals and benefit from being in a medical office building where they can feed of the referrals. Others rely on foot traffic or good visibility to drive customers to them, these type of doctors would fare better in a retail or traditional office complex, depending on location of building and space within the complex. So determining the best choice for your practice is difficult. It must be thought out carefully as it is one of the most major business decisions you will face.
3. Tenant Improvement Costs
The buildout costs for a medical office can range anywhere from $100.00 to $140.00 per square foot and beyond depending on the level of finishes and other requirements, such as plumbing, etc. While many medical buildings are already equipped with some of the basics, like ample plumbing, retail and office buildings will require much more tenant improvement dollars, which may or may not be available. Generally speaking, if a tenant requires substantially more dollars, there will be an increase in the lease term. Now that is not always a bad thing as most medical practices have notorious longevity. Due to the nature of outfitting a space for medical equipment and the disruption to the patients, if you plan to move, most medical practices remain for decades. If the owner understands the value of a medical tenant they may consider increasing the contribution, but again, it will require a longer lease term as a result.
4. Medical Use Stigma
In general the thought of a medical user in non-traditional space is a big fat no! Many building owners specifically limit the use of their properties and exclude medical practices as an approved tenant profile. Why? Well there are a myriad of reasons, but the all involve disruption to the other tenants, high traffic, excessive use of common areas and a burden on the parking. That is just to name a few reasons. So be sure you understand that you are not always wanted everywhere so be sure you focus on those properties that do in fact accept medical users.
One of the primary problems in zoning for medical accommodations is classification and description. What makes a “clinic,” a “hospital,” a “retirement home”? Should all kinds of buildings for medical care be considered hospitals, or should they be classified according to role? The questions of definition and zone location are undistinguishably linked in zoning ordinances. It is important for your broker to know that and ask those questions of the leasing agent before you waste any time.