Entries Tagged as 'Medical Office Space'
Here is a partial reprint of an article that appeared on the Orlando Medical News website. Good information for doctors or other medical professionals when looking for medical office space.
The number one factor affecting doctors' decisions when deciding on medical office space is affordability. Recently, a large surgical practice in Orlando signed a long term lease for 30,000 square feet in a new mixed use development project in South Orlando at $17 per-square-foot. This new leased space will also include an outpatient surgery center on the premises. Before signing this lease, this same practice was offered the same amount of medical space closer to a major Orlando hospital for $25 per-square-foot. Why pay $25 per-square-foot when you can go down the street and pay $17?
Doctors are looking for access to major road arteries and highways so their patients can find easily them. If a doctor's office is tucked away somewhere off of Lake Destiny in the middle of Maitland Center their patient may have a more difficult time finding them and have to go through a maze of side streets to find their office. After exiting the highway, doctors expect their patients to make less than two turns to find their offices. After all, as a patient they may not be feeling all that good in the first place. Why make their plight any more difficult if they can't find their doctor?
Mixed Use Development/Modern Architecture
Often, physicians are now looking for mixed use development featuring more modern architecture. They want buildings that are appealing and inviting. Unless it is a very small practice the old one story stucco flat roof office building is becoming a thing of the past. Two new medical office building projects are Legacy Pointe at Metro West and The Fountains at Tivoli Place that are being developed in Windermere. These are two examples of prime upscale designs with the more modern office park environments that many physicians want.
Parking Ratio and Parking
Most professional office buildings have a parking ratio of two to three parking spaces per thousand square feet. With patients coming and going throughout the day, doctors need to have at least four to five parking spaces per thousand square feet to avoid overcrowding. Since parking can be tight in the downtown corridor, doctors often shy away from downtown medical space. Reserved parking is also a nice plus for key employees and physicians. Covered handicapped pick-up and drop-off areas are a real asset, especially if there are associated outpatient treatment facilities.
Shell Space vs. Used Space
Although shell space may cost more in the beginning, it will end up saving the doctor a lot of money in the long run. With new shell office space you can do space planning/ design work to fit your own needs and patient flow. This way you won't waste square feet. Used office space with existing layouts often can't be adapted without expensive demolitions and remodeling. While this can be accomplished, there still remains the potential for poorly laid out space that doesn't fit the needs required.
Proximity to Other Physicians
In a medical office building, doctors are often looking for proximity to other physicians who could inter-refer to each other. For example, a family medicine physician will frequently refer patients to other medical specialties such as cardiology or orthopedics. With the right synergy, all of the doctors are inter-referring and enhancing their practices.
After interviewing several doctors, the new buzz word is "Ancillary Services." Traditionally, hospitals were the main benefactor of many of these services. Ancillary services include MRI's, sleep labs, physical therapists, outpatient surgery centers, and imaging centers. Doctors are more recently looking for extra medical office space where they can install ancillary services and other diagnostic treatment areas.
In the past, doctors needed to be close to the hospital to round on large numbers of inpatients and perform mostly inpatient surgeries. Now procedures are more frequently performed on an outpatient basis, and doctors can relocate their offices farther away from the hospital at usually lower lease rates. Many practices now have incorporated outpatient surgery facilities located at or nearby their office location.
Willingness of the landlord to restrict leasing to other physicians of similar specialty in the same building is often requested. While many physicians view this as an important concession, it probably is not that important in the long run. After all, there is really nothing a physician group can do if a competitor wants to relocate across the street. This is probably more important in rural or less populated areas where a new hospital is being established.
Building monument or signage to distinguish your medical group or practice is an important feature. Local zoning laws often restrict the size and location of business signage in any given area, but often the developer can offer "top of building" signs for major anchor tenants.
Medical Office Space
Everyone may be talking about the weak office market but there are areas in which the demand for office space remains strong and is even growing. The services of health care providers are required, regardless of the economy or real estate values and many realty professionals are making the most if this opportunity.
With the coming implementation of the Affordable Health Care Act, signed by President Obama on March 23, 2010, it is nearly certain that the high demand for medical and health care-related office space will continue. As the American public gains access to affordable medical, dental, and other forms of health care, more and more facilities and practitioners will be required to care for those who, in the past, have not sought or have severely limited use of health care services.
In some areas the overall office vacancy rate is as high as 25%, yet, the medical office space made up over 26% of the total leasing of office space in those same areas. According to David Scherer, manager of one-half million square feet of medical office space in Nevada, “Medical office space is recession resistant due to the fact that people need medical procedures through good and bad economic times. There wasn't as much speculative building with medical office space during the real estate boom, since it typically needs to be located next to a hospital, which makes it naturally supply constrained.”
Because medical offices are seeking new, more convenient locations to better provide services to their patients, the demand for medical office space is no longer constrained by the need to locate near a hospital. As health care becomes more available to American, medical offices are spreading into suburban areas, shopping centers, and other non-traditional medical office locations, driving the demand for medical office leasing even higher.
The average rents for medical office space has also dropped significantly during the past year, allowing health care providers to expand their office space as well as add additional locations to their practices. In addition, some medical practitioners are concerned about the implications of the health care act, has resulted in medical professionals choosing to lease office space rather than purchase existing facilities or building new structures.
With the health care legislation providing drive for the future of many medical practices, healthcare professionals are taking advantage of the tenant’s market. Incentives are often available with office space leases, such as tenant improvements, waived maintenance fees, or even free rent for a period of time, it only makes sense that businesses such as health care providers will benefit from the slow office market.
Due to slow reimbursements from government-provided health care, such as Medicare and Medicaid, as well as many private insurance providers, combined with the desire to reduce overhead costs, some practitioners have consolidated their practices in order to gain more negotiating power, resulting in the need for larger facilities and additional medical office space. Locating the right medical offices for these larger practices, combined with other factors, has worked together to keep the medical office space market robust even during slow times for the overall office space market.
In Leasing Medical Office Space - Part 1, we delved into some of the challenges facing medical and healthcare practitioners when leasing office space in which to provide their services to the public. While it’s true that established medical services don’t frequently relocate, more and more practices are opening branch facilities to better service their existing clients and attract new patients. Today, we’ll look at even more considerations a healthcare provider should consider when wishing to open a new practice, new branch, or relocating their primary office to a new, more convenient location:
After Hours Access: Many healthcare facilities may need to see patients after hours on an emergency basis or may choose to provide extended service hours. Today, many urgent care clinics are choosing 24-hour operations to provide less costly healthcare than provided by hospital emergency rooms. Not all lease language permits extended hours of operation. Also, some office space leases include some or all of the utilities used by the tenant during normal business hours. If operating beyond the traditional 8 am to 5 pm service window, the lease language will need to include an agreement about exactly which party pays what portion of the utilities so that special requirements are taken into account.
Landlord Access: In most office space leases, the landlord retains the right to enter the premises at any time whatsoever in order to inspect their property or show that property to realtors or other parties at the landlord’s discretion. Medical practices of all types all under special privacy acts which require that patient identify be protected at all costs. This means that the landlord or owner simply can’t be allowed completely, open access during the hours of operation. Of course, the landlord can expect reasonable cooperation through appointments or specific hours of access, but simply opening the door to each room in the facility at any time would be a clear violation of patient privacy. This requires extremely sensitive and clear lease language in order to ensure the interests of both the landlord or owner and the medical tenant are sufficiently considered and provided for in the lease agreement.
Exclusive Use Provision: When leasing office space in a suburban area, it is important that a competing healthcare facility providing the exact same services not be allowed to move into the same building or strip of property as your practice. Ask for a provision in the lease language which prevents the landlord leasing another space in the same building to a healthcare provider operating a competitive practice. This may require some very creative lease language because you might well want another healthcare provider that offers complimentary services to reside near your practice but you want to avoid direct competition.
Obtain a Qualified Lease Broker: When beginning your search for medical or health services office space, locate a licensed lease broker with medical office and facilities experience. These brokers understand the nuances unique to medical office space leasing and the negotiations required between landlord/owner and medical tenant such as tenant finish, ADA compliance, and can negotiate the best possible lease agreement for your practice.
Healthcare is a huge industry today and every type of healthcare provider requires medical office space in which to perform their practice. Whether the medical office space provides clinical services, diagnostic services, laboratory services or another niche of healthcare services, the needs of these providers differ greatly from the traditional office rental lease template. Here are a few of the most important issues and concerns to be aware of securing a medical office space lease that will help meet the unique needs of healthcare providers.
Convenience: All healthcare providers need to be in locations convenient to their patients. Competition can be fierce among healthcare providers and unless the office space is convenient, patients will simply go elsewhere. However, this is also true of traditional retail and office space. There is a larger concern with healthcare facilities; they need to have convenient access for handicapped visitors and those who are seriously ill. They need parking that is convenient to the entrance, wheelchair ramps available, and in some cases, it must be easy for patients on crutches to access.
Biohazards: No matter what type of healthcare practitioner is requesting your assistance in securing office space, there will be concerns about biohazards. There will likely be human biohazardous wastes collected and disposed of by the office space. Diagnostic equipment such as CT scanners or X-ray machines pose other hazards. Some landlords may be hesitant to consider the modifications required for such equipment. Special shielding, unique to the medical field, may have to be installed. In most cases, these situations will violate the standard lease language and need to be modified.
Tenant Finish: Medical facilities have especially unique requirements when it comes to remodeling the inside of office space. Traditionally, owners prefer to have any tenant finish performed by their own contractors, usually those that have performed similar remodeling for the in the past. Healthcare providers often require specialists to properly and safely remodel the leased office space. Often, the landlord will need to understand that the tenant finish will have to be done by contractors with whom they are not familiar. The property owner should retain the right to inspect work in progress and verify that mechanics liens are not attached on the property.
ADA: Medical facilities often require access for patients with special needs such as wheelchairs, walkers, crutches, and canes. They are, therefore, more likely than average to be scrutinized for Americans with Disabilities Act compliance. While the use may drive the need for additional ADA compliance, they will also want to avoid lease terms that cause them to pay the costs incurred for ensuring the building meets the strict compliance required. In most cases, the tenant will want to negotiate lease language that places this burden on the landlord.
Use: The use of traditional office space is outlined in the lease and is quite limited when viewed in terms of medical office space use. Wording which bars hazardous materials and biomedical wastes must be changed to prevent lease violations. The traditional boilerplate lease simply won’t work when dealing with the special needs of healthcare providers.
These are only a few of the areas of leasing medical office space that should be addressed by healthcare providers. Carefully read all lease language to ensure a healthcare provider can operate their practice within the language which is negotiated with the landlord.