By DOUG PRICE
There are four main types of commercial real estate properties that best fit the needs and requirements of healthcare professionals: office buildings, retail space / shopping centers, medical office buildings (MOB’s) and hospital campuses.
While there are distinctions between the classes, variations and vintages of these types of spaces, the comparisons typically boil down to several main considerations:
- Visibility, signage and exposure
- Window lines and natural light
- Monthly cost
- Who performs property maintenance
- Building amenities
- Synergy with other practices or businesses
- Accessibility, including parking and walking distance to the space’s entrance
- And more…
Each property type has benefits and understanding what those are will help you determine the type of space that best suits your practice.
Traditional office spaces typically provide more natural light and better window lines than retail spaces, and often at a lower cost. Office spaces provide a traditional business setting with other professional office or corporate based entities and offer a familiar experience for patients.
Most office buildings provide more assistance and maintenance from landlords as well, as many of the systems and amenities in the building serve and benefit multiple tenants. Office buildings often have common area benefits such as shared restrooms, vestibules, lobbies and sometimes common meeting spaces such as conference facilities.
The cost of office space is greatly dependent on location, quality and age of the property, as well as supply and demand. But as a whole, traditional office buildings are usually priced the most competitively compared to retail, medical office buildings or hospital campus spaces. Taxes and maintenance expenses are also typically lower in office buildings compared with the latter three property types as well.
The competitive pricing along with ideal window lines, natural light and a professional office setting make office spaces an attractive option for healthcare practices.
Retail Space / Shopping Centers
The primary benefits of retail spaces are that they typically provide more visibility, exposure and signage than other commercial property types. Signage and exposure are very important to public-facing, retail companies as they rely heavily on top of mind awareness and brand recognition. Hundreds or even thousands of potential customers or patients that drive by a sign every day generally creates additional revenue for those companies.
Another benefit of locating in a retail or shopping center is the synergy of other diversified tenants who drive traffic to the center. For example, having restaurants, a grocery store or other retail or service-based businesses in a shopping center will likely help you glean extra patients from their traffic. Many patients also find added convenience in being able to frequent neighboring retailers and businesses in the same trip.
Additionally, many healthcare providers like the simplicity of patients parking right in front of their spaces and being able to walk directly into their office. Being in a retail center typically provides the benefit of ample parking due to the need to accommodate traffic for multiple businesses, both large and small.
Lastly, retail properties usually offer easy access and have identifiable cross-streets and landmarks nearby. They are developed with high traffic flow and growth in mind, making it easy for patients to access.
Depending on the location and quality of property, retail spaces can be some of the most expensive options in the market due to the many advantages described. If evaluated properly, the benefits of placing your healthcare practice in a retail space can far outweigh the costs.
Medical Office Buildings (MOB’s)
Medical office buildings are dedicated exclusively to healthcare tenants and often provide an atmosphere that creates strong referral partners and synergies from healthcare related tenants. This is the greatest benefit of being in a Medical Office Building. If your practice operates off of a strong referral base of practices located nearby, then an MOB could be a great location for your practice.
MOB’s usually offer an increased supply of janitorial and utility services, and often, other healthcare related amenities. Medical Office Buildings are typically more expensive than traditional office buildings, but again, cost depends on many factors; including location, quality and age of the property and so forth.
Medical office buildings typically communicate professionalism in the healthcare community along with ideal synergies of other providers.
Hospital Campus spaces are very similar to an MOB, and in fact many MOB’s are located on hospital campuses. The differentiating factor is the hospital itself.
The number one reason a practice would desire to be located in or near a hospital campus would be its affiliation with the hospital itself or other complimentary practices that are affiliated with the hospital. Hospital affiliation is largely intended to create a strong referral base for a practice or the ability to easily access amenities such as a surgery or delivery center, etc.
Being located on a Hospital Campus is not the right fit for all healthcare related practices. But for the providers that find value in the benefits described above, it can be the exact location they want.
When considering if your practice should stay or locate in a traditional office building vs. retail space vs. MOB vs. a Hospital campus, your healthcare real estate agent should help you fully evaluate all your top options. Your agent should provide you a detailed breakdown of the pros and cons of each top property option and how they would positively or negatively affect your practice.
Budget typically plays one of the main factors in making your choice. However, there are many other pros and cons of each property option that your agent should fully evaluate with you, to ensure you make the best choice for your office location.
Doug Price is an agent with CARR Healthcare, the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, thousands of healthcare practices trust CARR to achieve the most favorable terms on their lease and purchase negotiations. CARR’s team of experts assist with start-ups, lease renewals, expansions, relocations, additional offices, purchases, and practice transitions. Healthcare practices choose CARR to save them a substantial amount of time and money; while ensuring their interests are always first. Contact Doug at Doug.Price@carr.us