Leasing medical office space is not the same as leasing a regular office. You need a location your patients can reach, a building that works for clinical use, and lease terms that will not cause problems three years in. Since 2004, I’ve helped business owners and landlords lease and sell commercial property, and the same questions come up again and again with medical tenants.
This guide covers them in the order I would ask them: whether leasing is right for you, what to ask about the space and building, what the lease will really cost, and which terms matter most for a medical practice.
Key Takeaways
- A lease is an agreement to pay rent for a set period. That period is the lease term, so know it before you sign.
- Think through problems before you sign. Ask about costs, repairs, changes to the space, and what happens if something goes wrong.
- Rent increases are possible during the term, no matter how good the deal looks. Find out when and by how much.
Is Leasing the Right Move for Your Practice?
Most practices lease at some point. Here is what you gain and what you give up.
The Pros of Leasing
- You can focus on patients. Day-to-day building maintenance is usually handled by the landlord or property manager, which frees up your time and your staff’s time.
- Lower upfront costs. A lease typically needs a deposit and monthly rent over the term, which is easier to budget than buying or building.
- Better access for patients. A leased space can put you near public transit, restaurants, and other businesses, which makes visits easier.
- More flexibility. If your practice grows, you may be able to expand or move. Money that is not tied up in a property can go into equipment.
- Less upkeep. Maintenance and building upkeep are generally the property manager’s job, so you may not need extra staff for it.
- More location options. You can choose a busy urban area for visibility and growth. Expect those areas to cost more.
- Less build-out. A space already set up for medical use can get you seeing patients sooner than a space you have to renovate.
The Cons of Leasing
Higher cost over time. You do not build equity, and you may pay for improvements to space you do not own.he other hand, short-term leases are cheaper but may require frequent relocations if your business grows or shrinks in size.
Limited control. The landlord can make changes to the building or sell it, and that can affect you.
Long commitment. Landlords often ask for multi-year terms. That is a problem if your practice outgrows the space early.
Who Else Is in the Building?
When you are looking for medical office space for lease, it is important to ask who else is in the building. You want to make sure that you are comfortable with the other medical tenants or other professionals in the building, and that they will not be a nuisance to your patients or staff.
If there are other medical offices in the building, then this could be a great opportunity for your practice. It can be beneficial to have ancillary services nearby, such as labs and pharmacies. There are also some studies that show that when there are other medical professionals in the same building, they tend to attract more patients than if they were by themselves.
When leasing an office space, you want to be sure that you’re part of a community with other businesses like yours. A building full of doctors, for example, will have more medical professionals than any other type of business. A building full of financial advisors will have more financial advisors than any other type of business. This can be important because it means more opportunities for networking and collaboration with people who share your interests and goals.
How Long Is the Lease?
A lease document is a contract that states how long you can use an apartment or other property, as well as what happens when that lease is over. The length of the lease can vary from months to several years.
The length of your lease will affect how much rent you pay each month. For example, if you have a two-year lease and the market rate for apartments increases during that time, your landlord may raise your rent at the end of your lease term. If you have a shorter lease, then your landlord can’t raise your rent until the lease is up, and they must give you notice before doing so. It is important to remember that If your landlord does raise the rent after your lease has ended, you will be responsible for paying this extra amount until you move out.
Will Rent Increase?
Rent increases are expected in commercial leases but aren’t always clearly defined. You want to make sure that you are aware of how much the rent will increase throughout the lease, and that you are comfortable with the amount.
The best way to find out if rent increases are allowed is by asking your landlord or property manager. You can do this during the lease negotiations, even after you’ve signed the lease, before moving in. Ask them directly if they plan on increasing your rent in the future or if they have any plans to make any major renovations that may require more money from tenants. If they say no, then this should be good news for you! You’ll know that even if prices go up in the area where you live, at least your landlord won’t increase your rent on top of that cost increase.
Does It Include Utilities?
When looking for medical office space, you want to ensure that utilities are included in the lease. This can save you a lot of money each month, and it will make your life easier.
Most landlords don’t include utilities as part of the rent. Instead, they charge a separate fee for gas, electricity and water. So, If your landlord doesn’t include utilities in the monthly rent, you’ll need to make sure you have enough money set aside to pay them.
Are There Additional Expenses?
If you’re a doctor or healthcare providers who’s considering leasing a space, it’s important to ask about additional expenses. Some landlords will include expenses for building utilities, trash removal and lawn maintenance in the lease agreement while others may not. If you’re not sure about whether any of these costs are included, it’s best to ask before signing the lease so that you know what your total expenses will be once you move into your new office space.
It’s crucial that you understand all costs associated with your lease before signing on the dotted line. You don’t want to be surprised by any added expenses after the fact!
Who Handles the Maintenance?
If renting a space from a landlord, you’ll want to know if they are responsible for maintenance. Many landlords will say that they are responsible for maintenance, but it’s essential to read your lease carefully. If the landlord doesn’t specifically outline what they’re responsible for, then they probably aren’t.
Some landlords may be responsible for maintaining the common areas of the building, such as the lobby and hallways. Others may only be responsible for keeping the exterior of the building in good repair. If you’re unsure what your landlord’s maintenance responsibilities are, it’s best to ask before signing the lease.
Lastly, you should also find out if there is a maintenance fee included in your monthly rent. This fee is typically used to cover the cost of repairs and upkeep of the property. If there is no maintenance fee, that doesn’t necessarily mean that the landlord won’t charge you for repairs – it all depends on what you talked about before signing the lease.
Can You Alter the Space?
If your practice is growing and you need more room, it’s important that you have the ability to alter your space. Some landlords will allow modifications, while others don’t.
You may love the look and feel of an office but find out later that there are no outlets for power strips, you can’t adjust lighting or add more workstations. While these issues may seem minor, they can actually make or break a business as they will impact productivity and efficiency in the office.
In order to make sure that your practice is successful, you need to plan ahead. A lot of times, this means thinking about how you will alter the space once it’s been rented. If you’re not allowed to make changes, then it’s important to know this before signing the lease so that you don’t end up in a situation where you’re unable to do what’s needed for your business.
How Does Parking Work?
When it comes to leasing a medical space, one of the first questions on your mind is probably parking. Parking is one of the major costs that tenants pay for when they lease commercial real estate investment. It can also be one of the most challenging aspects of leasing an office space, especially in densely populated areas that lack adequate parking. The good news is that there are many options available for business owners looking to leased space with ample parking spaces.
Parking can be at a premium in some areas, so if there aren’t enough spaces open within walking distance of your office building, this could cause problems for both employees and patients who need to park nearby.
The best way to find out how parking works at any given property is to ask about it directly from the leasing agent or property manager. This will give you an idea of whether or not parking will be an issue and if so, how much it will cost per month or year. Some landlords may even provide free parking as part of their lease agreement or offer discounted rates for sure tenants who need more than one space per person working at the facility.
Questions to Ask Before You Lease
Is this the right location for my patients?
A good location helps with patient retention and with referrals from other practices and hospitals. Your office should be where your patients are. The closer you are to where they live or work, the easier it is for them to book and keep appointments.
Does the space fit my needs?
Make sure the office is large enough for your staff, your equipment, and your patients. Map out each room and pad your square footage estimates so you have room to grow or add services.
Do not skimp on the waiting area. Patients packed shoulder to shoulder or standing during busy hours lead to complaints that spread fast.
Who else is in the building?
You want to be comfortable with the other tenants. Ask who can lease space in the building. A noisy neighbor, such as a gym above your exam rooms, can be a real problem for a medical practice.
Other medical tenants can help. Ancillary services like labs and pharmacies nearby are convenient for patients, and a building full of related practices can create networking and referral opportunities. They can also mean competition. Ask whether nearby suites hold complementary specialties or practices that compete for the same patients. If competition worries you, see the exclusivity section below.
How does parking work?
Parking is a real cost and a real patient issue, especially in dense areas. Ask the leasing agent or property manager directly:
- How many spaces come with the lease?
- Is there a monthly or annual charge?
- Is there free or discounted parking for tenants who need more than one space per person working at the practice?
- Is parking nearby and walkable for patients?
Many patients are already stressed or in pain. Circling for a spot makes it worse. If the only option is a public garage or street parking, ask about validation.
Is the space ADA accessible?
Ask the landlord directly what accessibility features the property has, what has been updated, and what is planned but not finished. If something is missing, find out why. Have an attorney or other qualified professional confirm what applies to your use.
What is the move-in date?
Do not sign for a space that is not ready. Ask when you can occupy it and whether any repairs or renovations must be finished first. If the landlord cannot give an exact date, ask for a range, such as “within six months” or “by summer,” so you can plan. A landlord who cannot give you any timeframe is a warning sign.
Lease Term and Renewal
The lease term is how long you commit to paying rent. It can run from one year to several years, and it affects your budget, your flexibility, and how rent changes over time.
- Longer terms give you stability and help you avoid moving again.
- Shorter terms can make sense if you are not sure how your practice will grow or shrink, but they can mean moving sooner. See our guide to short-term commercial leases.
How the term affects your monthly rent depends on the deal. Ask for the numbers on more than one term length.
Also ask what happens at the end of the initial term. Are there renewal options? Will rent stay stable or can it jump? If rent goes up after the term ends, you owe the higher amount for as long as you stay.
What a Medical Office Lease Will Really Cost
Rent is only part of it. Get every cost in writing before you sign so there are no surprises.
Rent and Rent Increases
Rent increases are normal in commercial leases, but they are not always spelled out. Ask the landlord or property manager during negotiation, before you sign:
- Does the lease include regular rent increases? When, and by how much?
- Are the increases fixed, or tied to the Consumer Price Index?
- Can you negotiate a cap on future increases?
- Does the landlord plan any major renovations that could cost tenants more?
Utilities and Operating Expenses
Ask whether utilities are included in the rent. In many leases they are billed separately, so confirm what is covered and what is not. If they are not included, set money aside for gas, electric, and water.
Also ask for a full list of operating expenses. These are the day-to-day costs of running the property, such as utilities, janitorial, trash removal, landscaping, taxes, insurance, and maintenance fees. High common area maintenance fees can cut into your profit.
Taxes and Insurance
Ask what real estate taxes and assessments you may owe, what insurance the lease requires, and whether the landlord covers any extra insurance costs tied to the building or amenities.
Rentable vs. Usable Square Feet
Usable square footage is the space you can actually use. Rentable square footage also counts shared areas like lobbies, hallways, and restrooms. Clarify which one the quoted number covers, and whether it includes stairwells and storage closets. See our guide to usable vs. rentable square footage.
Triple Net Leases
In a triple net lease, you pay property taxes, building insurance, maintenance, and other expenses on top of rent. Make sure you understand every term before you sign. See our guide to types of commercial leases.
Build-Out Costs
I recommend budgeting roughly $200 to $300 per square foot for build-out and improvements on a typical medical space. That covers flooring, paint, electrical, plumbing for sinks, and other work to turn a generic shell into a clinical space. Specialties like surgery centers and radiology labs need far more infrastructure, with costs that can approach $1,000 per square foot, or over $2 million for a 2,500 square foot suite. Plan for these costs on top of monthly rent.
Tenant Improvement Allowance and Free Rent
A tenant improvement allowance (TI) is money the landlord contributes toward renovating your space. It is set before work begins, and it may be a total dollar amount or a per square foot amount. Your goal is a TI large enough to cover most or all of the construction cost.
If you find a space you like that needs work, ask for a construction allowance during negotiation. The amount usually depends on your credit, the length of the lease, and market rents. Ask about free rent (rent abatement) in the first months too. It helps your cash flow while you ramp up.
After-Hours Utilities
Medical practices often need utilities outside standard business hours. Ask whether the landlord allows after-hours access. If not, price out a separate meter for after-hours use.
Who Maintains and Changes the Space
Maintenance and Repairs
Read the lease. Landlords may say they handle maintenance, but if the lease does not spell out who is responsible for what, do not assume it is them. Some cover common areas like lobbies and hallways. Others cover only the exterior. Also ask whether a maintenance fee is built into rent, and who pays when something breaks.
Alterations
Ask what changes you can make. A space can look right and still lack outlets, flexible lighting, or room for more workstations. Small limits like these can hurt efficiency. Know them before you sign.
Capital Improvements and Tax Treatment
Capital improvements are permanent structural changes or restorations that add value, extend the life of the property, or adapt it to new uses. Ask whether the lease passes any of those costs to you through operating expenses, and whether you can limit them. Ask your CPA whether you can depreciate improvements you make to the space, and have an attorney review how the lease handles both.
Restrictions and Subleasing
Ask whether the lease restricts anything your practice needs. For example, some landlords limit gas use in the building or control window signage. Also ask whether you can sublease part or all of the space, and what limits apply. See our guide to subleasing your office space.
Lease Terms That Matter for Medical Practices
Exclusivity
Some medical tenants negotiate an exclusivity clause so no other medical provider can lease in the building. Ask potential landlords about their experience with medical tenants and whether they will agree to exclusive arrangements. Weigh this against the benefit of having complementary practices nearby. See the CCIM article on lease exclusivity provisions.
Landlord Access and Patient Privacy
Ask whether the lease limits the landlord’s access to your space. Patient privacy makes this important.
Zoning and Use
Ask about zoning rules or restrictions that could limit how you use the space. Confirm with a qualified professional before you commit.
Hazardous Materials and Biomedical Waste
Ask the landlord whether they have rules for handling hazardous materials and biomedical waste, and what your office will be required to do. Also ask about security, fire protection, and ventilation systems. Confirm requirements with the right professionals. I do not give compliance advice.
Signage
People need to find you. Ask for both street monument signage and building signage in the lease, and find out what limits the landlord puts on signs.
Negotiating Your Lease
Can you negotiate rent on a commercial property? Yes. Here is where I would push:
- Rent abatement in the first few months to cover moving and build-out costs.
- CPI-linked escalations instead of fixed bumps, and a cap on future increases.
- A TI allowance large enough to cover most of the build-out.
- Trade-offs. If you ask for lower rent, be ready to offer something, such as a longer term or paying the first months up front, depending on your budget.
- Default protection. Ask for the right to cure a default, so a small issue does not turn into a serious one.
- Dispute resolution. Ask how disputes over operating costs, utilities, or taxes get resolved, and whether you can see the records behind the bills in a reasonable time. Have an attorney review this section.
A lease is a legal contract. Have a qualified attorney review it before you sign.
Choosing the Building and Layout
Look Beyond the Suite
Operating expenses and the tenant mix of the building both affect your bottom line and your patient experience. Compare buildings on common area fees, neighboring practices, and parking, not just rent.
Purpose-Built vs. Second-Generation Space
A custom build-to-suit space lets you design everything for your practice, but it costs more up front and usually means a longer commitment. Space already improved for clinical use, with plumbing, wiring, and infrastructure in place, can avoid downtime and double rent during construction.
Waiting Area and Patient Experience
Small touches change how patients feel about a visit. Comfortable seating, working WiFi, white noise to muffle conversations, decor that fits your brand, and good parking all help. Plan the waiting area first, not last.
FAQs
What should I look for in a medical office lease?
Start with location. Make sure patients and staff can reach it easily. Check that the building is clean and safe, and visit the neighborhood at night to see how it feels and whether it is well lit. Finally, make sure the leasing agent answers your questions without rushing you.
Can you negotiate rent on a commercial property?
Yes.
How do I ask for lower rent?
Be ready to give something in return. Offer a longer lease term or pay the first months up front, depending on your budget.
How long does it take to complete a medical office lease?
Once the heads of terms are agreed, it can take about 4 to 6 weeks.
What is in a medical office building?
Typically doctors’ offices, clinics, dental practices, and other healthcare businesses. The mix depends on the size and location of the building.
Conclusion
When leasing medical practice office space, it’s important to ask the right questions in order to get a good understanding of what you need and what the property can offer. By taking the time to ask these questions, you can avoid any surprises down the road and make sure that your perfect space is right for your needs.
If you have any other questions or would like help finding the perfect medical office lease space for your business, please call me today or schedule a free consultation online. I’d be happy to assist you!
