Medical practice
Medical practices have their own unique qualities. Image – Canva
  • Within commercial and office management, medical practices have unique qualities
  • The lease terms can be longer, more profitable, but require special attention
  • Commercial property manager Wouter Jellema explains how to treat them (differently)

Within property management, there is residential, retail and commercial property management. The latter category includes commercial (offices) and industrial (warehouses and vacant land). 

In my view, there is another sector in property management that sets itself apart from other tenancies: the medical field.

This group covers all businesses that cover medical matters, from age care to pathology, from animal hospitals to GP’s and medical centres, from hospitals to pharmacies, and so forth. 

A special niche

Repair and maintenance is often a more urgent matter in medical tenancies than with other tenancies.

A roof leak in an operating room could become a matter of life and death and should get immediate attention. It might mean a quick fix is required before we can organise a permanent solution. 

In my opinion, medical tenants also wish to commit to longer-term tenancies with many options, potentially staying at the same property for decades. When a doctor rents a consultancy room, the tenant might be happy to commit to a shorter term, as running and closing costs are less. 

Medical tenants often enjoy being in the same area, as they complement each other.

For example, in Ellenbrook, within a kilometre ratio, there is a GP, pharmacy, dentist, a few physiotherapists, a vet, radiologist, and others. 

Parkway Ellenbrook
180sqm medical office in Ellenbrook

Medical tenants also have to keep a certain standard of the property that they occupy. Although the lease agreement often states that the tenant needs to maintain the property during occupancy, with medical tenants, it is in the tenant’s benefit to keep the property in good and clean condition. A patient would think twice before visiting a health practitioner that does not have a clean and healthy office. 

I also see higher returns on these tenancies due to the many benefits. When you purchase a medical property with multiple long-term, stable tenants, the return is often better than buying a smaller industrial unit with a one year lease in place.

Note though, the purchase price for these properties is usually higher per square metre. 

The medical tenancies also have the benefit of offering essential services. Hence, their business can be more stable than, for example, a retail outlet offering luxury items or a gym. 

Finally, the relationship between landlord and tenant is often stronger. When tenants rent properties from a hospital, the hospital benefits from having the tenants there.

This scenario would be similar to retail tenants in a shopping centre. The hospital would not be as prominent when it has fewer medical practitioners occupying the different units. If many properties in the area are vacant, other medical tenants may look elsewhere to operate their business as businesses bring business.

Medical commercial tenancies deserve their own niche and approach.

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