The need for long term tenancy appears to be in its greatest demand in decades. This urgency will rise considerably over the next several years as investors continue to discount vacant property, rather purchasing through banks which typically transact without title objections or past, present or future litigation issues. Another factor that will improve the need for stable tenancy is that lenders are again beginning to support investors by reducing capital requirements in exchange for long-term leased, less risky investment real estate.
Understanding the importance of medical tenancy, as it relates to the stabilization of an asset for purposes of a long term hold or investment sale, also requires a basic understanding of what is standard in its tenancy. This recognition, as well as access to professionals which support the healthcare profession, is key to preservation of a leveraged real estate asset or portfolio.
Tenancy items relative to medical professional are many; most outlined in a lease rider. To keep this blog passage succinct, we have outlined the most common needs below.
Utility expense can be one of the highest cost components of medical occupancy. Practice tenants often have higher utility usage than standard office tenants because many have equipment and hygienic requirements which consume large amounts of utility service. Medical professionals typically consume extra water from examining rooms with sinks. They also may utilize extra electricity from diagnostic or therapeutic equipment that requires more electricity than standard office equipment. Some medical uses, such as surgery centers, require the continuous use of uninterruptible power and, consequently, the extra expense of back-up power generation and data transmitters. Because of these items, it is best for the landlord to seek calculations relative to the variety of medical professionals that are considered for tenancy.
Medical uses often will limit or require specialized janitorial and waste removal services. Special attention may be provided to medical and infectious waste maintenance and storage. These issues sometimes focus on the method for isolating medical waste and used equipment, the kinds and qualities of waste containers, and the process for removal and disposal of such waste.
Medical tenants will frequently have more intensive water and electric needs. Special machinery and furnishings may require special floor/pad accessories. Equipment may also require special fixturing and unique buildout. If the tenant expects to retain ownership of the equipment at termination of the lease, it be necessary to address this in the lease. Another consideration is to the waiver of lien or security interest in equipment which is owned or pledged, especially if there are hazardous materials involved, which is the case in laboratory and radiology services. The examination rooms in a healthcare facility may also be good only for the single use by the healthcare tenant, with no likelihood of a secondary need by a subsequent tenant. Equivalent issues apply to extra work needed to install and remove ADA accommodations.
Some special medical practices will may require special improvements. Ambulatory surgical centers typically require the need of the first floor. Maternity and birthing centers typically require the closest proximity to reserved parking. Psychiatric centers typically require separate and secured access. Plastic surgery clinics typically require separate and less visible access corridors.
The are just a few of the common needs relative to medical tenancy. For more information or submission of a request for our healthcare real estate services, please contact your MREA representative.