Finding a suitable real estate for your medical practice can be time-consuming, laborious, and expensive. Healthcare professionals need to choose one of the best real estate properties and make space planning decision for their practices. However, medical office space is quite different from traditional office space and it has its own set of challenges that need utmost care when leasing such space. So healthcare practitioners need to sign new medical office lease carefully by avoiding certain common mistakes.
Here are some common mistakes that healthcare professionals need to avoid when sighing medical office lease.
Signing a personal guarantee
A personal guarantee is a legal contract between a landlord and tenant to guarantee a specific obligation of a business. Personal guarantees offer landlord additional recourse in the event of a default on a lease agreement. The implications of a personal guarantee are quite significant because tenant’s personal assets, such as house, retirement funds, cars, and others, are at risk. Landlords like personal guarantee, however it’s wise for tenants not to go for it, especially when it comes to leasing medical office space. Landlords may tell you high rates of tenant improvements that are required for medical office space creating additional risk and then suggest you to sign a personal guarantee to offer additional security for your full performance of the lease. Assistance of efficient property appraiser can prove helpful to avoid signing a personal guarantee when leasing a medical office building.
Underestimating the rate of tenant improvements
Tenant improvements for a medical office building can be quite expensive. Developing or remodeling a medical space to suit unique requirements of your medical practice can range from $50 to $250 per sq foot depending on myriad factors such as current condition of the existing medical office suite, level of specialized requirements for the medical practice (e.g. lead walls for x-ray units), and personal choice of improvement finishes. It’s wise to understand current condition of the medical suite and what you are getting into before you sign a lease. Reputed real estate valuation services can help you assess the current condition of the medical office building by creating a detailed and competitive report and budget for the construction project while you are analyzing your options.
Underestimating the timeline and complexity of build out
Just like the cost of tenant improvements varies, the complexity of a project and timeline for delivery of the finished space vary. For instance, a medical practice requiring digital x-ray units and surgery suite will take longer to design, permit, and develop a health-care practitioner’s office than an office that may simply require individual exam rooms. It is advisable to hire the right team of experts from the outset and create the design, obtain all necessary permits, and develop the suite. Guidance of professional service, such as business valuation services in New York, can prove worthy.
Trusting landlords and their agents to represent you
Never count on landlords’ agents to represent you when managing healthcare real estate dealings. This is because landlords hire ‘full service’ real estate agents to find doctors and other healthcare professionals to rent out their vacant medical office buildings. These agents work for their landlord employers with only aim to maximize the rent paid by the medical tenants. On the contrary, tenants want to pay less rent. If they follow the advice of landlord’s agents, they are bound to get disappointed later since these agents’ true allegiance is in interest of the landlords and not tenants. It would be wise to hire professional property appraisers when leasing a medical office building than relying on landlords’ agents.
Do it yourself – DIY
Even though old adage ‘Physician, heal thyself’ may be true, when it comes to real estate it is always better to seek professional advice to learn market conditions and crack the best possible real estate deal. Every medical space is different and every landlord’s situation is unique. Real estate appraisers have the best knowledge of real estate market and they are aware of all latest changes and market trends. Their guidance is worthy to help medical tenants set fair rent when leasing a medical office building for their practice. As they are aware of all real estate terminologies and market situations, they help healthcare professionals sign the lease safely and without any concerns. So it is always better for physicians to count on professional advice than working on their own when it comes to leasing a healthcare real estate for their practice.
If you avoid these five mistakes when leasing a medical office building and seek professional advice, you can crack the best deal and sign a fair lease to run your medical practice efficiently and smoothly.