So I have an opportunity to purchase a doctors office. There are several exam rooms and private offices. There are 6-7 rooms I can rent out. Each room to a separate tenant needing simply desk space or a single office. We would have a joint conference room, reception desk, 3 shared bathrooms and a nice break room area. I have no idea what to charge. This technique is not common in our area. I realize that the rates will be different based on location. Obviously an office in San Francisco will fetch more than eastern PA. Just some ideas and points to consider for all those that have been involved in this sort of thing. Thank you in advance!
Would there be one receptionist to answer the phones for all? I was in a business center set up like this for seven years before purchasing my own commercial building. Receptionist was officially an employee of the owner but answered the phones for all of us and she processed our mail and greeted our clients. It gave sole proprietors a very professional look.
To sweeten the deal, the owner had a commercial copier installed, furnished the office, and didn't charge extra for utilities, phone, or Internet. It was all worked into the price so you didn't get nickeled and dimed to death every month. It was a great set up and I only moved out because of the deal I got on my own building and the long-term goals that I have.
Office leases were the highest in town, but when you factored in all that you got, it was a great deal. I used to joke with the receptionist that I paid for her and got the office for free. Something as simple as having a receptionist to answer and screen phone calls can make a huge difference in the life of a solopreneur.
To come up with rents, you would need to know the typical utilities for the building, average office lease prices in town, the cost of a receptionist and phone system (if you were going to include that), mortgage, insurance, RE taxes, maintenance, and vacancy rates for the area. Your vacancy rates might be higher than typical if you go with the full service approach that I described. Without the receptionist, however, your vacancy rates would probably be lower than average. Around here there are a lot of small business owners that are a one person or two person show that just want a small office outside of their house or they can work quietly and meet with clients.
Once people find out that they can just rent the conference room by the day, you should get some revenue from that as well. You should also look at leasing out extra parking places if that works where the building is located.
Hope this helps!
Yes! Thanks. Great insight.
@Michael Knaus why would you try the shared/short-term office model versus the traditional long-term lease? There are a few websites that allow you to do it sort of like AIRBNB. liquidspace.com is one, can't remember the others off hand. When I looked into it I thought it would be a good business model but only in more populated areas. I'm in a less urban area and airbnb and uber have barely made it here.
Also, the particular property you describe sounds like it's set up as medical? The last thing most people want in medical care is someone that rents month-to-month. It's better targeted to professionals that only occasionally need a professional space to meet clients or start-ups before they're ready for permanent space.
We are a big medical town and have lots of vacant medical office space at the moment some of which I have purchased. So I am researching ways to fill it with tenants if you want to compare notes further.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.