Entries Tagged 'Medical Office' ↓

I wrote a series of articles about tips and suggestions on how to lease office space at one of my other legal blogs, The Startup Lawyer. For the most part, these general suggestions about leasing office space will apply for leasing a medical office.

On The Texas Property Lawyer, I recently published a blog entry titled What to negotiate on your commercial office space lease and listed the following issues:

-Right to renew the lease
-Right to cancel the lease
-Insurance requirements
-Personal guarantees of the lease
-Security deposit
-Option for additional space if needed
-Permitted use of the premises
-Tenant buildout allowance
-Operating costs to be charged to tenant
-Right to assign the lease to another tenant
-Responsibility for repairs and maintenance

While there is no tremendous difference between medical office space and “regular” office space when it comes to negotiating the lease, the nuances of the health care industry might prompt the negotiation of some additional terms, or in the least give some issues listed above higher priority.

An additional term a health care professional should consider negotiating is exclusivity–while your lease is in effect, the landlord can not lease to another health care professional with your same specialty. While the larger the office building (think large MOB) won’t negotiate that term, smaller professional office parks and plazas should be more willing.

Because the buildout expenses required for a medical office tend to run high, negotiating a larger tenant buildout allowance should be a priority. And after you (partially) fund that buildout, the right to renew and option terms become even more important since the improvements stay with the building.

Medical secretary not performing well? You can fire. Don’t like your medical billing company? You can switch with relative ease. Medical office space not working out? You’re pretty much stuck.

Here’s a list of some of the steps you should take before you sign your next medical office lease:

(1) Hire a tenant representative. They know the available space and market rents all at no cost to you (as they are paid by the landlord if a deal is made). Just be sure they have experience leasing medical office space and have no problems working with an attorney.

(2) Hire an attorney. While your tenant rep will help you find a space and let you know how much to pay for it, your attorney will handle the language and negotiation of the medical office lease. What may seem like a good deal in terms of rent could be a disastrous deal down the road if you don’t have an attorney review the medical office lease. All too often I see people focus solely on rent when negotiating a medical office lease to their ultimate disadvantage. Other terms like options, exclusivity, length of lease, common area maintenence charges, personal guarantees and responsibility for repairs must be negotiated.

(3) Make sure the medical office fits your practice. I recently toured a building touted as “medical office space” that had a waiting room the size of a broom closet. Thus, make sure your potential medical office space not only lays out the way you want, but will be able to function as such. Apparently, the medical office space developer thought physicians have only one patient waiting at a time.

(4) Know that the landlord wants you more than you want the medical office. As a physician or other health care professional, you are at the top of any commercial real estate landlord’s wish list. Of course, they won’t let you know that but just keep that in mind when it’s time to negotiate the terms of your medical office space.

Leasing your medical office space is such a huge practice decision that I intend to expand this blog post into a more formal presentation in the near future.