If you are in the real estate world, then you know that there’s a big difference between commercial and residential real estate. However, there are also differences between the different types of properties such as healthcare, retail and warehousing. Healthcare real estate has become a growth area as providers are looking to increase their footprint and income in existing communities. While some aspects of these types of properties may seem obvious, there are some important nuances to understand healthcare commercial real estate and how they differ from other properties. In addition, we examine the financing considerations, special regulations that need to be adhered to and how to find the right commercial contractor for a healthcare property.
How Does Healthcare Real Estate Differ From Other Types of Properties?
While it may seem relatively apparent what types of structures are healthcare properties, it is important to draw the distinction between the different types. They include: office, retail space and shopping centers, medical office buildings, and hospitals. Office space typically includes more traditional businesses, but those that are medically aligned such as medical billing, counseling, and administrative functions. Retail and shopping centers typically have fewer medical tenants, but can include clinics and pharmacies which require ample parking and easy access to visitors. Medical office buildings are exclusively designated for medical and healthcare tenants and can include a wide range of medical services from dermatologists, to physical therapists to medical spas and general practitioners. Hospitals are often similar to medical offices, but the main difference is the hospital itself. These structures feature surgical centers, delivery wings and longer care facilities for patients.
Due to their expansion, hospitals and large healthcare systems are reluctant to sell their existing properties, so developers are filling the void by building new medical office space and other types of facilities for potential tenants. Medical offices and standalone medical clinics have risen to fill the demand void left by traditional healthcare facilities.
Lower and Better Financing
Healthcare real estate loan policies are very different from residential real estate loans. For example, residential loans are heavily dependent on a buyer’s income and financial assets. However, commercial real estate policies consider other factors such as borrowing experience, the property’s purpose, capacity, occupancy, location, and the property’s revenue. Lenders recognize that medical tenants sign longer leases than other types of properties, which provides more stability for building owners.
Different Laws To Abide By
There are different legalities when leasing healthcare commercial real estate. Leasing healthcare commercial property requires an owner’s awareness of laws when a tenant is a medical service provider. These special and restrictive regulation include Occupational Safety and Health Administration (OSHA), Health Insurance Portability and Accountability Act (HIPAA), Stark and Kickback, in addition to state and local regulations.
Selecting The Right Contractor for A Medical Project
When purchasing or building a commercial real estate property, it is critical to engage with a commercial contractor that specific experience with healthcare builds. With the unique features, capabilities and requirements involved, a general contractor can easily make costly mistakes that will have to be remedied before opening. Before selecting a contractor for a healthcare structure, consult with a construction engineer or architect who can provide valuable input for reliable contractors they have used in the past.
