5 Things to Know When Leasing MOBs

The healthcare industry and medical office real estate are undergoing a tremendous shift. This is because healthcare professionals are adjusting to a new mode of service delivery, the effects of the Affordable Care Act and the growth of the 65+ demographic. While many of the same principles required to lease general office space apply to healthcare, there are several nuances unique to medical users.

As big and small medical office building investment opportunities continue to rise, here are 5 important nuances to consider before making any investment into medical office buildings:

1. Building Usage: Medical tenants = hazardous materials and biomedical waste on a daily basis. Because of this, special requirements need to be accounted for in the lease to ensure compliance.

2. After-Hours Access and Paying for Utilities: It’s commonplace for medical tenants to see patients after normal building hours. If it’s an urgent care facility, these clinics operate 24/7. This also means X-ray machines, CT scans, and other electronic equipment will be operating after hours. When looking through a lease, be sure to pay special attention to how this will be accounted for. This can save you unnecessary utility expenses.

3. Janitorial Services & Facility Management: When thinking of medical offices, cleanliness is often one of the top three things patients look out for. MOB tenants have high service expectations, and standards and regulations in effect at the hospital carry over to the medical office building, when hospital services carry over to the MOB. Janitorial standards are more sophisticated and higher due to the use and type of facility and may range from light office cleaning around desks, to terminal cleaning in surgical centers. The cost for these services is greater than general office and strict standards must be followed when cleaning and for waste removal.

4. Landlord inspection and privacy: Generally, commercial leases provide the landlord the right to re-enter your space to show the premises to future tenants, inspect for compliance with the lease and allow access to make infrastructure repairs in the lease premises and elsewhere in the building. Yet health care providers need to limit the landlord’s access to examining rooms and other areas during certain hours of the day as well as non-access to patient records. This 100% needs to be spelled out in the lease agreement.

5. Exclusivity Provisions: An exclusive use provision is a lease term in which the landlord promises not to lease any other space in the development to a party whose intended use would be in direct competition with tenant’s use of its space. In medical office buildings it can be prudent to get exclusivity for your specific specialty practice.

This is just the tip of the iceberg. If you’re looking to jump into a hot market, be sure to always hire a tenant advisor in your area, who specializes in healthcare and MOB services. Brokers who are experienced in leasing medical space can be helpful as they understand how to structure terms of the lease to fit the unique needs of the healthcare tenant.

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