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Top Ten Requirements for Medical Office Space

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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.

Affordability
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?

Accessibility
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.

Ancillary Services
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.

Geographic Location
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.

Exclusivity
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.

Signage
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.

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Commercial Lending to Stay Tough

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I spent the day yesterday at the Commercial Broker's Association (CBA) Commercial Real Estate Form.  A great program on relevant issues in today's commercial real estate markets. The one presentation that hit hard was Market Knowledge: Strengths and Weaknesses in Different Segments of the Commercial Real Estate Market presented by Dr. Jim DeLisle, University of Washington Director, Graduate Real Estate Studies at the Runstad Professor of Real Estate. 

My take away: The Commercial Mortgage Backed Securities market, where commercial mortgages were bundled and sold, has pretty much evaporated. The only loans that are being made and will continue to be made are portfolio loans, where the lender actually keeps the loan in their portfolio. The result... very few mortgages are being written. It is much more difficult to obtain a commercial mortgage and the loan to value; the present value, is in the neighborhood of 40% - 60%.  With many commercial mortgages rolling over in the near future, new financing will be a problem. I expect there will be many good opportunities to purchase commercial properties at attractive rates.

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Employee Office Space Allocation is Shrinking

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According to Buildings Magazine reporting on a recent IFMA study, the  allocation of office space per employee is shrinking thanks to new technology, cost saving efforts and cultural changes in the way business is done to satisfy a younger workforce. The chart shows  the the average square feet per employee based upon job position.

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Real Estate Agents Use Of Social Media

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I found this Infographic on Mashable and found it interesting at how social media has ingrained itself in the real estate sales business. Granted this reflects the use of Social Media by residential agents. Commercial agents are usually a few steps behind when it comes to the use of cutting edge technology.

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National Office Space Update & Office Tenant Strategies PodCast

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National Office Update & Office Tenant/ User Strategies PodCast
Original Air Date:    4/2/11

Very informative broadcast about the office market and office space strategies for office space tenants.

"The office user show provides a national office market update and best practices for corporate office users. Chris Macke, Senior Real Estate Strategist with CoStar Group provides an update on national office market performance including top cities for investment and markets prime economically for corporate headquarters. He also shares market advice for office users and expectations for 2011 and 2012.

Show host Michael Bull and industry leading guests cover current topics important for office users including strategic lease provisions for tenants, protecting lease rights before foreclosure, prevalent lease situations in this economy and the guests share best practices when renewing leases and securing new locations.

If your company uses office space or you advise companies that do, you will find this show very informative and enlightening."

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