Healthcare real estate differs in a number of ways from other forms of commercial real estate, and in turn, healthcare tenants tend to have different requirements than other commercial tenants. Because of this, it’s important to familiarize yourself with all key differences before leasing to them. If you are planning to lease to healthcare service providers, read some of the need to know points below.
Attract The Right Tenants
Healthcare service providers can be some of the most stable tenants due to the fact that the healthcare sector is typically more resistant to economic downturn than others, and once a practice has an established patient base, they will likely not want to move. As a result, you can count on a steady flow of monthly income every year. In order to attract the right healthcare tenants it’s important to consider what aspects are most important to them. Healthcare real estate brokers can help you identify these priorities and ensure your property is up to par.
Ensure Compliance
When it comes to medical real estate contracts, you will need to consider medical commercial real estate legislation. The most important regulatory requirements to include in your leases are the Stark Law and Anti-Kickback Laws, which aim to protect against healthcare fraud. This applies to ownership groups that include a potential referral source to the tenant in the ownership group. It is strongly recommended to ensure strict compliance, as the medical industry often receives heightened scrutiny from authorities. Additionally, it is helpful to acquire an extensive knowledge of lease terminology and market research, so that you go into leasing negotiations prepared.
Consider Medical Waste
Bear in mind that healthcare providers tend to generate a significant amount of medical waste. Therefore, you should determine whose responsibility it is for storing, separating, and disposing of medical waste, and include these details in the healthcare lease. This might also involve contracting with a medical waste disposal company. In addition, it’s important to ensure compliance with relevant laws and regulations. Generally, healthcare tenants are likely to be responsible for dealing with medical waste, as well as any failures to comply with the law.
Parking, Power, and Amenities
With staff and patient volumes peaking at certain times, parking can be pushed to the limit. It is recommended to have 5 spaces per 1,000 SF with no less than 4 spaces per 1,000 SF. Ensure that ample power for imaging and other equipment is accessible. A covered drop-off is critical for a positive patient experience. For Class A buildings, consider having physician parking and valet for your patients.
Implement Tenant Improvements
You may need to invest in more tenant improvements (TIs), than with other types of tenants. According to the needs of each healthcare provider, upgrades may be required to physical spaces, such as reinforcing floors or adding lead-lined partitions for X-ray rooms. In addition, some medical practices may require backup generators to ensure an uninterrupted power supply while taking care of patients. The need for tenant improvements should be discussed during lease negotiations. They can be a crucial element of the lease agreement, as well as the landlord-tenant relationship, so you will need to consider the location and age of your property.
If you need guidance with any aspect of leasing, buying, or selling healthcare real estate, connect with the team at HBRE for more information.
About HBRE
Headquartered in Nashville, Tennessee, HBRE is a full-service commercial real estate firm specializing in healthcare real estate. With over 50 years of combined industry experience serving 28 states across the U.S., we deliver exclusive healthcare solutions so you can provide the best patient care. If you have any questions about leasing, buying, or selling a commercial property in Nashville or beyond, connect with our team today.
