Getting educated on professional medical space?

Question

Hello,
I'm a physician interested in learning about the ins and outs of commercial office space leasing, specifically for the medical field. Mainly for physician practices, but also other possible revenue generators, like ancillary services (laboratory, imaging, and pharmacy). Are there any recommended books or other education sources out there I might start with?

Thanks!

Joel Owens · Answer

Medical can be good but  it is VERY heavy TI laden with all the hooks ups and electrical requirements demanded by tenants.

A plus is they rarely move because of this. Need to make sure the lease does not have early termination outs in the primary lease term and solid personal guarantees.

Dave Pierre · Answer

Hello All,

Very informative post. I am a young Physician from Newark NJ. newbie to real estate investing. I'm looking to dive into the commercial real estate investing for medical offices the in the Essex/Union county area of NJ. I have a lot more to read about this particular niche and hope to build strong connections on BP.

Ana Nomys · Answer

@Robert Scholl

Good Morning,

Great post. I have been working with a number of MD professionals and other's like Accountants & Attorneys here in NJ. We are picking up sfh's in mixed use and even residential zones (again on busy county roads and state hwys) and transitioning them to professional use zoning. This allows them to:

Put a sign on busy roads for advertising.

Create small "Local" offices around various medical centers to create space for follow up and light office visits.

Often the MD's can put a staff member in the home to live (to which they collect rent) while running the office as an employee. (check local ordinances for this one as there are often sq footage requirements and rules)

@Rainier Guiang

Is absolutely correct re the ADA and parking. That said the "professional office" status in most cases suppresses the parking issues (again see zoning in your area)

A great side note is that ADA renovations are treated very well in the tax code so often I have no issues in getting all the needed ADA Reno's done under budget. Quite often the Doc's make money on them in the long run ;-)

Karen Margrave · Answer

@Robert Scholl Over the years we have worked with many physicians in leasing and purchasing their space. We have developed buildings specifically to lease to physicians, small outpatient surgery, labs, etc. We have also built a medical/dental clinic that was for an Indian tribe, plus separate office buildings in an office park for a psychiatric clinic, etc.

Depending upon the type of physicians, the development costs can vary significantly. From basic office space, to installation of specialty items for their practice. However; there are companies that help with the planning and design of those types of things, and they are upgrades to the physicians. However; the initial design is still more expensive than basic space.

In addition to that, THE biggest factor in high demand areas where land costs are high, is parking. Parking requirements are higher for medical than general office space.

We personally like the medical office niche, and hope to work back into it here in southern California. We actually had some land in escrow where we were going to build a project, close to a major medical center. However; due to the uncertainties of Obamacare, we backed off. What are your views of Obamacare and its effect on your practice?

There's associations, etc. that deal specifically with medical office space if you do a search. Here's a publication you might find interesting too, and start you off. Good luck. Medical Office Space

Chad Ballard · Answer

My wife's grandfather invested in a medical building as well as aparking  structure right next to it. Great location, close to  tthe hospital and the Metro Link here in LA.  I don't know all the details but I know he partnered with the doctors that are now the   Maybe

@Karen Margrave can give some insight.

Robert Scholl · Answer

Thanks for the tips and suggestions. I'm definitely interested in this from both a medical and real estate aspect. I'd like to build something up with 1 or 2 partners. The key is getting commitments from doctors who are targeted as tenants.

Lots of work to do. Gotta learn more about NNN leases too!

Thanks again

Robert

Joel Owens · Answer

Well drug stores are generally separate triple net properties. I have plenty of doctor clients but funny enough many don't want to own the medical offices.

They want NNN leases turn key properties to invest because they are so busy.

Many of my clients are surgeons so I guess that is why they are so busy with constant operations and want mailbox money only.

Do a search on Amazon online. I used to go to Barnes and Noble or Borders books and could find niche type books to buy but they have now went to basic beginner books on most categories which are no value to me. When I go to Amazon I can find specialist books that are more in depth with some info I might not know already.

Rainier Guiang · Answer

Hi Robert,

I dont know of any books that you might read but I can tell you about my experience.  I am a physician also and we purchased the building our medical practice is in.  The only thing that makes a medical building different than any other building is the following:

1) ADA rules - make sure your building is ADA compliant.  Bathrooms, width of hallways, access by elevator,etc.

2) Parking ratios - this is a big one.  In my area, we must have 5 parking spaces for every 1000 sq ft of medical space.  If you buy a building and dont have enough parking there is little you can do to make more parking.

Good luck!