When it makes business sense and they meet certain criteria many healthcare practitioners are better off owning their medical office space. However in reality it's more common for them to lease or rent medical office space instead of buying. Below are 3 reasons why it would make sense for a practice to rent medical office space rather than purchasing:
- Less Upfront Cash Needed – When you purchase a medical office building for sale you typically have to put down a large sum of cash usually between 10% and 25% depending on the type of loan you get. Even for an established practice this large down payment is not always doable, especially in cities where medical office space is at a premium. By renting you only have to put down a security deposit typically equal to one months gross rent as long as you have good credit.
- Medical Office Buildings For Rent Are Well Equipped – Most medical office buildings for lease will already be equipped with the infrastructure (electrical power, plumbing, back up generators, etc.) needed for medical office use. They also already have parking ratios suitable for your needs. When you purchase a building you may end up having to make upgrades and customize the space to make it ready for medical use before moving in. The same would be true if you leased a traditional profession office.
- Access to the Most Popular Locations – In most large cities the premium locations have already been cherry picked which means you won't typically find any available medical office space for sale. If you do the prices are going to be very high or there will only be large buildings for sale and not small 2,000 to 4,000 sf medical office condos which may be more suited to your needs. By leasing you will be able to find space in more popular medical areas that would not be available any other way.
- Convenient for Patients – Also keep in mind that your patients don't want to have to travel all over town to go to their doctor appoints. They may prefer going to one main location where the majority of their doctors are located. It's much more convenient for them to have most of their doctors in one location than scattered all over the metro area.
I'm not saying to not buy medical office space. You have to make sure it makes business sense and that you have the finances to do so. If you have any questions about buying or renting medical office space feel free to give us a call.