How to Find Medical Office Space for Lease

Searching for medical office space for lease looks like any other office search at first: a map, a list of suites, some tours. The difference is that many of the things that decide whether a suite works are not in the listing. Plumbing routes, mechanical capacity, recorded use restrictions and whether the landlord will allow your build-out rarely appear on a flyer.

The other difference is that your location is tied to the value of the practice. A dental attorney writing in Dental Economics notes that much of a practice's goodwill depends on its location and that a move can put it at risk. A medical office lease is also usually hard to walk away from once you have paid for clinical improvements. That argues for narrowing the field on purpose, instead of touring whatever is available this month.

One page is enough. It gives you a way to rule spaces out quickly, and it gives a landlord, broker or architect something concrete to respond to.

• Services today and services you may add within the lease term, including any imaging, procedures or sedation.
• Providers, room counts and support space, worked out from your own schedule.
• Systems you cannot do without: water and drains by room, power for specific equipment, shielding, evening or weekend heating and cooling.
• Patient needs: accessible parking, elevator size, drop-off, wayfinding.
• Budget stated as total occupancy cost, including build-out and moving, not as a rent number.
• Latest acceptable open date and your current lease expiration.

Write the list with your partners or owners in the room. Disagreement about adding a service or a provider is far cheaper to settle now than after the plans are drawn.

Your search boundary should come from data you already have. Plot where current patients live or work using ZIP code counts, then mark the physicians, hospitals and other sources that send you patients. The overlap is where a move is least likely to cost you patients or referrals.

New practices have no patient history, so the map comes from the people you intend to serve: demographics, competing practices and the hospitals where you hold or plan to hold privileges. Our guide to choosing a location covers how to build that map. For this step, the output you need is a short list of submarkets, each with a reason.

Use several channels at the same time, because no single one shows the whole market.

• Public listing sites. Useful for a first read on what is available and what landlords are asking, but incomplete and often out of date.
• Medical office buildings. Check whether the building or campus is tied to a hospital. Space there may be limited to physicians with staff privileges or to medical tenants, and hospitals may restrict services that compete with their own.
• Previously clinical suites. A prior medical or dental build-out can shorten construction, if what remains fits your practice and the restoration terms are clear.
• Practices that are downsizing, merging or relocating. A sublease or an assignment may be possible, subject to the landlord's consent.
• Ordinary office and retail. These widen your location choices, especially for services needing little plumbing, but need more feasibility checking.
• Direct outreach to landlords. A building with an expiring tenant may not have advertised the space yet.

Tenant-side representation is one way to reach space that is not advertised. Dental Economics notes that a tenant representative's fee is typically paid by the landlord when the lease is signed, so ask any representative plainly how they are paid and whom they work for.

A short list of two or three suites is where the search turns technical. Do this before you spend real money on design, and while you still have alternatives.

1. Walk each finalist with a contractor or engineer who knows clinical work. The Dental Economics article recommends this kind of walk-through to verify there are no major structural or plumbing obstacles.
2. Ask for the capacity of the building's systems in writing: water, drains, electrical, HVAC and after-hours service.
3. Have your attorney obtain recorded documents. A healthcare real estate attorney writing for Facilities Net cautions that use restrictions are usually recorded and that copies should be gathered early.
4. Ask your architect to confirm that zoning and the building's occupancy classification fit your services.
5. Request written proposals from more than one landlord, so you can compare rent, allowance, term, free rent and restoration side by side.
6. Put the key points in a term sheet. It is usually nonbinding, but the same Dental Economics article warns that landlords seldom agree later to concessions left out of it.
7. Move to the full lease only after these checks are clear.

Timing depends on the space, the amount of construction and your local permit process, so there is no standard schedule to rely on. Ask your architect and contractor for a realistic range on each finalist. Then build the calendar in reverse: open date, equipment installation, inspections and any state radiation sign-offs, construction, permits, design, lease signing, proposals, tours.

Include time for practice-side work too, such as notifying payers and patients and handling records, since state and payer requirements vary. A late start weakens your hand, because the landlord can see the expiration date in your current lease. If the new suite slips, you may need a short extension or a temporary sublease, so read your holdover clause before you need it.

TAG works for tenants and buyers only, and in a medical search we help define the need, canvass advertised and unadvertised space, and run competing proposals, while your attorney and design team handle the law and the drawings.