What is the “wow” factor of a medical building? Is it the location or curb appeal? Could it be the front lobby or storage space? What about the height of the ceilings or layout? Actually, it is all of the above. The individual factors that make up each medical facility create a full package that should appeal to potential buyers or tenants in the medical field. And to increase the value of the property, there are five specific things that owners of medical buildings should consider:
Improve the Exterior of the Medical Building
Oftentimes, curb appeal provides the first impression to a potential medical buyer or tenant. General improvements to the exterior, such as landscaping or even newly poured walkways, can help increase value. Additionally, if the parking lot is near the building, the owner may even need to consider having it repaved. The building may also need to be pressure washed or painted before a potential buyer or tenant views the property.
Improve the Interior of the Medical Building
How long has it been since the flooring was updated? Is the floor plan conducive to a variety of medical practices, or would the future buyer or tenant need to overhaul the space? Building owners should consider interior updates like new paint, new flooring, or new appliances and furniture for the break rooms.
If the owner intends on leasing the medical building, they should also consider usable square footage vs. rentable square footage. Usable square footage includes the door-to-door or wall-to-wall square footage of a tenant’s space. If multiple tenants share hallways, storage rooms, or break rooms, a landlord cannot base the rent on that square footage. Conversely, if the facility offers complete, separate portions of the property that don’t share spaces with other tenants, the landlord can capitalize on a higher rent value using rentable square footage.
Add Amenities for Tenants
Medical spaces that offer amenities provide significant value to tenants. Some beneficial amenities include fitness centers, conference rooms, or business centers with access to copiers or printers. But the best amenities to include are the ones that help generate additional income. These can include areas like a coffee bar or small store.
Pick the Right Time to Sell the Medical Building
A property owner should be up-to-date on their local market. For example, are real estate assets in that community increasing or decreasing in value? Is their medical building easily accessible to both potential tenants’ employees and patients? What is the local government doing to ensure growth in that city? These are all necessary questions to consider regarding the timing of the sale or lease negotiation.
In addition to carefully watching the market, the owner of a medical building should also check their tenants’ leases. The length of time each tenant has left on their lease can impact the value of the medical property. For example, a building that hosts tenants with lease time frames of 8-10 years will be more valuable than one with just 2-5 years remaining on their leases.
Hire a Medical Real Estate Advisor
Medical real estate is a niche market. While the foundation of commercial real estate still applies, there are several special circumstances in selling or leasing a medical space. Commercial property advisors who specialize in medical real estate are able to view the building through a medical professional’s eyes. They look for factors such as additional plumbing and storage space. They review the local market, paying close attention to medical properties. And in addition to having the expertise to handle a healthcare facility, they have built a network of healthcare professionals who could be interested in the facility. HBRE’s team of medical real estate advisors are skilled in all of those areas.
Medical properties are valuable commercial properties, offering services that impact the whole community. Maintenance and updates to these facilities should reflect the needs of current and future medical practices. To learn about other ways to increase the value of medical buildings, reach out to an HBRE medical real estate advisor.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
