The pros and cons of renting a medical space
If you’re opening up a new practice or are relocating your medical office, you might be looking into renting a medical space. When choosing a commercial building to operate in, it’s important to understand every angle, including the pros and cons.
While there is no one-size-fits-all approach, it helps to be aware of a few factors before signing a long-term lease. Some things to consider are the current local market, economic conditions, and how quickly your practice is growing. With this in mind, let’s take a look at some of the advantages and disadvantages of renting a medical office space.
The pros of renting medical space
- Financial benefits – Leasing a medical space frees up your working capital, which is especially beneficial for new practices. With no down payment needed, you can focus on generating enough income to fund the growth of your practice. As a business, your lease payments are tax-deductible and the cashflow helps your credit score. Depending on the contract, you’ll have peace of mind from unforeseeable costs and large capital items.
- Repairs and maintenance are hassle-free – With a lease, the landlord typically handles the repairs and maintenance, freeing up your time from the additional responsibility. You’re able to focus on growing your practice and serving your patients.
- Flexibility – Whether your practice is growing or you’re downsizing, renting a medical space allows you to evaluate your options and respond to the market. It’s easier to leave a space when you’re leasing, providing you with short-term flexibility that your practice may need.
Renting medical space
The cons of leasing medical space
- You’re vulnerable to rent increases – When leasing, you may be faced with annual rent increases. This is a conversation that’s important to bring up with your landlord during contract negotiations.
- No equity – Unlike owning a medical office space, you’re earning no equity with a lease.
- Limited control over maintenance and repairs – Although you avoid bearing the responsibility of potential problems, you’ll also have no control over the quality of maintenance and repair jobs. However, an experienced and professional landlord often has good working relationships with quality maintenance and repair companies. After all, the building is an investment property that landlords would want to properly upkeep. It’s also at a cost to them if repairs and maintenance are not done well and cause more problems down the road.
- Lack of stability – Ultimately, landlords can refuse to renew a lease once it expires. Moving a practice is expensive and comes with the risk of losing patients. This highlights the importance of finding a professional landlord who is interested in establishing a long-term tenant-landlord relationship. For commercial office spaces, landlords are also looking to retain tenants as the process of finding a new tenant is also at a cost to them.