Most physicians spend years mastering their specialty. Commercial real estate isn’t part of that training—and landlords know it. A standard commercial lease is already a complex document. A medical office lease adds another layer: build-out requirements, compliance obligations, infrastructure demands, and operational dependencies that don’t exist in a typical office transaction.
That gap—between what a landlord’s lease says and what a medical practice actually needs—is exactly where tenant representation earns its value. The right tenant rep for healthcare doesn’t just help you find space. They help you understand what you’re signing, negotiate terms that protect your practice long-term, and avoid the kinds of lease provisions that can quietly undermine your operations years down the road.
This post walks through what physicians and practice administrators should understand before they enter a medical office lease negotiation — and what to look for in a tenant rep who can guide them through it.
A commercial lease written for a general office tenant and a commercial lease written for a medical practice may look similar on the surface. They are not the same document.
Medical practices have physical requirements that most buildings aren’t built to accommodate without modification.
Plumbing, electrical capacity, HVAC zoning, medical gas, ADA compliance, specialized flooring, and exam room configurations all require build-out work that goes well beyond standard office tenant improvements. How that work gets funded, who retains ownership of the improvements, and what happens to them at lease expiration are all negotiable—but only if your tenant rep knows to raise them.
Medical practices also carry regulatory obligations that affect where they can locate and how their space needs to be configured. HIPAA considerations, infection control standards, and state licensing requirements can all interact with lease terms in ways that aren’t obvious until a problem surfaces.
Finally, medical practices operate on long planning horizons. A physician investing in a specialty build-out—imaging equipment, surgical prep areas, specialized plumbing—needs lease terms that match that investment. Signing a short-term lease or one with unfavorable renewal options on a space that required significant capital to build out is a risk most physicians don’t fully appreciate until it’s too late to renegotiate.
When evaluating a medical office lease, these are the provisions that warrant the closest attention:
The TIA is the landlord’s contribution toward build-out costs. For medical practices, build-out costs routinely exceed what a standard office tenant would spend. Negotiating an adequate TIA — or securing the right to amortize additional build-out costs into the lease — is one of the most consequential items in any medical office lease negotiation. Accepting a landlord’s initial TIA offer without pushback often means leaving significant money on the table.
This clause defines what the tenant is allowed to do in the space. For medical practices, this matters more than most physicians realize. A permitted use clause that’s written too narrowly can restrict your practice from adding services, bringing in a specialist, or expanding into adjacent specialties without triggering a lease amendment. Get this language reviewed carefully and negotiated broadly enough to accommodate where your practice may go — not just where it is today.
If you’re located in a multi-tenant medical building or a mixed-use development that includes healthcare uses, an exclusivity clause prevents the landlord from leasing space to a direct competitor in the same building or on the same campus. Not every landlord will agree to this, but it’s worth pursuing — especially for specialty practices where a competing tenant would have a direct and measurable impact on patient volume.
A practice that invests heavily in a space needs the right to stay in that space on predictable terms. Renewal options should be clearly defined — including the timeframe for exercising them and the rent formula at renewal. Uncapped rent escalations or market-rate renewal clauses can create significant financial exposure at the end of a lease term, particularly if the practice has become operationally dependent on that location.
Holdover clauses define what happens if a tenant stays beyond the lease term without executing a renewal. In many commercial leases, holdover rent is set at 150% or more of the base rent. For a medical practice in the middle of a renewal negotiation, a punitive holdover clause can create real leverage problems. Negotiate this language down before you sign.
Common area maintenance charges are a standard feature of commercial leases, but the definition of what’s included in CAM can vary significantly. Uncontrolled CAM escalations have caught many tenants off guard over the life of a lease. Push for an expense stop, an operating expense cap, or audit rights — and make sure you understand exactly what costs the landlord is allowed to pass through.
Looking for tenant representation for your medical practice? Hokanson’s brokerage team works exclusively on the tenant’s side—no landlord conflicts, straight answers, and deep experience in healthcare real estate.
Tenant representation for medical practices isn’t just about identifying available space and submitting a letter of intent. A capable healthcare tenant rep brings several things to the table that a physician or practice administrator navigating this process alone typically won’t have access to.
Before entering any lease negotiation, a few principles are worth keeping in mind:
Medical office lease negotiations take longer than general office transactions, and build-out timelines for healthcare space routinely run six months or more. Physicians who start the process late frequently end up negotiating from a weaker position because their existing lease expiration is approaching.
Infrastructure matters as much as square footage. Before committing to a location, confirm that the building can accommodate your mechanical, electrical, and plumbing requirements. Retrofitting inadequate infrastructure mid-build-out is expensive and can delay your opening.
If your practice merges, is acquired, or needs to exit the space before lease expiration, the assignment clause governs your options. Restrictive assignment language can complicate a practice transition or make it difficult to exit a space that no longer fits your needs.
Side agreements, landlord promises, and verbal commitments during negotiation don’t hold up after signing. Every material concession or obligation belongs in the lease document or in a written amendment. A good tenant rep will make sure nothing significant stays outside the four corners of the agreement.
A medical office lease is one of the most significant financial commitments a physician or practice will make. The terms of that lease will shape your operations, your overhead, and your flexibility for the duration of the agreement—and often well beyond it.
Tenant representation for medical practices exists because the stakes are high and the process is genuinely complex. The right tenant rep for healthcare brings market knowledge, negotiating experience, and an understanding of how medical practice lease terms interact with the real-world demands of running a practice. That combination protects your investment and gives your practice a stronger foundation.
Hokanson has represented tenants across healthcare, financial services, and commercial office for decades. We work on your side of the table—and we stay involved through build-out, move-in, and beyond.
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