What Is Medical Office Space?

Medical office space is a real estate term. A listing that uses it may mean a purpose-built clinic, a suite a prior doctor occupied, or an ordinary office the landlord is willing to convert. The label tells you who the space is being marketed to. It does not tell you what the space can actually support.

Building and fire codes use their own vocabulary. NFPA 101, the Life Safety Code, sorts medical settings into business, ambulatory health care and health care occupancies. A CMS memo on the code quotes its definition of an ambulatory health care occupancy as space used for outpatient treatment or anesthesia that leaves four or more patients at one time unable to act for self-preservation without help. It adds that a facility whose patients are mostly capable of self-preservation, with no anesthesia, could be a business occupancy. The American Society for Health Care Engineering likewise points to four or more patients and says to count across the entire building. Editions and local adoption differ, and the classification changes what the space has to provide.

Which code edition applies, and how it is enforced, depends on your state and city. Ask your architect to confirm the classification for your services before you commit to a space.

A law firm attorney writing on healthcare leases lists the construction factors that separate medical space from traditional office. Most of them are invisible on a tour, so it helps to know the list.

• Plumbing. Sinks in exam rooms add water and drain lines that an office floor was not planned around.
• Power. X-ray, MRI and similar equipment draw more electricity than standard office equipment, and heavy patient traffic and longer hours add to the load.
• Heating and cooling. Depending on the practice, exam rooms may need to run warmer while staff areas run cooler, which means more zones.
• Floor layout and strength. Bay depths in medical buildings are often shallower than in traditional office, and heavy file systems may need added floor support.
• Radiation protection. Practices using radiation need specially designed rooms.
• Privacy. Walls, doors and the path a patient walks all affect how private a visit feels.
• Access. Parking, accessible routes and elevators large enough for a stretcher matter more when visitors are patients.

None of this means an ordinary office cannot become clinical space. It means the conversion has to be checked against what the building can actually deliver, and the same writer advises that the lease contain a precise construction plan verifying that the tenant's HVAC, plumbing, electrical and other needs fit the building's capacity.

Medical office space usually comes in one of three forms, and each carries its own trade-offs.

• Medical office buildings. These are designed for clinical tenants, so the infrastructure and neighbors tend to fit. Buildings tied to a hospital are often developed or controlled by the hospital, and they can carry private restrictions on who may lease and what services may be offered.
• Ordinary office buildings. A suite in a general office building may offer more choice of location and floor plate. The questions are whether the plumbing and mechanical systems can be extended, whether the landlord will allow it, and how after-hours service works.
• Retail-style clinics. Urgent care and other medical uses have moved into retail centers for visibility and easy parking. The trade-off is the center's own rules. A grocery anchor's exclusive on dispensing pharmaceuticals, for example, can restrict a medical tenant, and ambulance traffic or patients gathering on the sidewalk can create friction with other tenants.

Restrictions like these are often recorded against the property. Ask for the recorded documents early, because a landlord's willingness to lease does not remove a restriction held by someone else.

A medical lease often starts from the same form as any office lease, but several ordinary clauses need a second look because of the way clinical tenants operate. A real estate attorney writing on medical leasing points to these.

• Landlord entry. Privacy laws on medical records may call for changes to a clause giving the landlord open access to the premises.
• Hazardous materials and waste. A flat ban on hazardous materials does not fit a practice that handles biological specimens or chemotherapy agents. The lease should set the rules and say who is responsible for disposal.
• Utilities. A cap on electrical use set for a typical office tenant may not be enough, and the landlord may want the right to meter separately.
• Assignment. Physician groups need to admit partners and accommodate retiring doctors, which ordinary transfer clauses may treat as an assignment.

Medical waste adds its own layer. The U.S. EPA says medical waste is primarily regulated by state environmental and health departments, so the rules for storage and pickup depend on where you are. Some uses in some states also require a Certificate of Need, which can affect where a service can be located at all. Ask your healthcare attorney whether that applies to you.

Before you treat a listing as clinical space, get answers to the questions below. They apply whether the suite is new, previously medical or plain office.

• ✓Was this suite actually used for patient care, and by what kind of practice?
• ✓Can water, drain and waste lines reach each room we plan to use?
• ✓Is there enough electrical and HVAC capacity for our equipment and hours, and is that in writing?
• ✓Will heating and cooling run during our evening or weekend hours, and at what charge?
• ✓Does any recorded restriction, exclusive or hospital agreement limit our services?
• ✓Does the building's occupancy classification match what we plan to do, including any sedation?
• ✓Is there an accessible route from parking to the suite, and is the elevator large enough for how our patients travel?
• ✓Who removes specialized improvements such as shielding when the lease ends?

TAG represents tenants and buyers, and for clinical space our role is to run these questions early, alongside your architect and attorney, so a space that only looks medical is ruled out before you have spent money on plans.