🤝 What to Know Before Signing a Medical Office Lease in Texas
Why a “Standard” Lease Isn’t Standard for Doctors
For most physicians, a lease isn’t just a rental contract. It’s the foundation of your business, shaping patient flow, costs, and flexibility for years to come.
The problem is that most “standard” commercial leases aren’t written with healthcare users in mind. Clauses that work fine for law firms or accounting offices can create expensive challenges for medical tenants once you factor in compliance, build-outs, or equipment needs.
At STAT, we’ve reviewed hundreds of medical leases across Texas. Small details at signing time often become big headaches later. Before you commit, make sure you understand the key sections of your lease and how to negotiate terms that actually protect your practice.
Estimated reading time: 4 minutes
1. Confirm the Space Is Truly “Medical-Ready”
A listing might say “medical office,” but that doesn’t always mean the building is designed or approved for clinical use. Before you sign, verify that the space can legally and physically support your operations.
Here’s what to check:
Zoning and Permits: Confirm that medical use is allowed by both the city and the property owner. Some office parks limit high-traffic or diagnostic uses.
HVAC and Plumbing: Medical suites need stronger ventilation systems and multiple wet points. Retrofitting after the fact can be expensive and delay your opening.
Electrical Load: Imaging, sterilization, and IT systems typically draw more power than general office setups.
Leasing usually requires less initial capital than purchasing. That can free up resources for clinical equipment, staffing, marketing, or technology.
Many landlords are willing to invest in tenant improvements (TI), which are modifications that make a space suitable for medical use, as part of a lease negotiation. Having a broker who understands healthcare build-outs can ensure those improvements meet compliance and workflow needs.
STAT Tip: Request a short “medical feasibility walk-through” with your broker, contractor, or architect before finalizing the lease. It’s the best way to identify hidden infrastructure costs before design work begins.
Understand Tenant Improvements (TI) and Who Pays
Tenant improvement allowances are one of the most valuable parts of any medical lease, but they’re also one of the easiest to misunderstand. A strong TI clause can save your practice thousands of dollars during build-out.
Key questions to ask:
What’s included? Is the allowance a set amount per square foot, or will the landlord deliver a “turnkey” build-out ready for occupancy?
When are funds released? Some landlords reimburse only after construction is complete. Try to negotiate partial payments at progress milestones.
Who manages the work? Determine whether you or the landlord will select the contractor, and clarify who owns the improvements once construction is done.
STAT Tip: Keep detailed records of all approved costs and payment timing. Transparency early in the process prevents disputes and keeps your build-out on schedule.
3. Understand Operating Expenses, CAM, and NNN Costs
Base rent is only part of what you’ll pay each month. Most commercial leases in Texas include additional pass-through expenses that cover property operations and upkeep. For medical tenants, these can make a significant difference in your total cost of occupancy.
CAM: Common Area Maintenance
CAM represents your share of expenses to maintain shared parts of the property—parking lots, landscaping, lighting, lobbies, elevators, and exterior cleaning. Each tenant pays a portion based on the size of their space relative to the total building.
Because medical practices often generate more foot traffic or stay open longer than other tenants, your share of certain CAM items (like HVAC use or janitorial service) can be higher than expected.
NNN: Triple Net Structure
Many Texas medical leases are written as triple net (NNN), which means the tenant pays base rent plus its proportionate share of:
Property taxes
Building insurance
Maintenance (CAM)
So when you see a rate quoted as “$28 NNN,” that number refers only to base rent. The NNN charges are often several dollars per square foot and are added on top to create your total gross rent.
For example, if a landlord quotes $28 NNN and your practice leases 2,000 square feet in an 8,000-square-foot building, you’ll pay the base rent on your space plus 25 percent of the property’s shared costs.
If those NNN expenses total $10 per square foot, your real, all-in rent would be $38 × 2,000 = $76,000 per year, or about $6,333 per month.
Unlike base rent, NNN charges aren’t negotiable, since they represent actual property expenses such as taxes and insurance. What is negotiable is transparency—request a detailed estimate showing how those costs are calculated, how often they adjust, and whether any administrative fees are included.
Ask the landlord or broker to provide a rent estimate sheet showing base rent, NNN, and projected annual increases. It’s the easiest way to understand what your actual monthly payment will look like over time.
Why This Matters
NNN and CAM charges often rise faster than base rent because they’re tied to taxes, insurance premiums, and service costs. Negotiating clarity and limits up front protects your budget and avoids surprises during year-end reconciliations.
STAT Tip: Confirm your right to audit or review CAM and NNN statements annually. Transparency now prevents billing disputes later.
4. Negotiate Lease Term and Exit Protection
Long-term commitments can be valuable for locking in rent stability, but they can also restrict flexibility if your practice grows or relocates.
Before signing, weigh the length of your lease against your business plan.
Key points to evaluate:
Initial Term vs. Renewal Options: Try to secure renewal rights at predetermined rent increases rather than leaving future rates open.
Expansion or Contraction Rights: Ask for options to lease adjacent space if you grow, or to sublease if you need to downsize.
Assignment Clauses: Ensure you can transfer the lease if you sell your practice or merge with another group.
Termination Triggers: If the building changes ownership or major repairs disrupt operations, negotiate language that allows for early exit or rent abatement.
STAT Tip: Flexibility is leverage. Well-crafted exit and renewal clauses let you adjust as your practice evolves without being boxed into a space that no longer fits.
The STAT Perspective
Leasing medical space is more than finding an address that looks right. It’s about creating long-term alignment between your physical environment and the way you deliver care.
At STAT, we focus exclusively on healthcare real estate and work with physicians, dentists, and medical groups throughout Texas. Our role is to translate the fine print into practical, financial, and operational terms that make sense for your practice.
Because landlords typically pay brokerage fees, our advisory support comes at no direct cost to you.
If you’re evaluating a new space or want a second look at a lease already on your desk, we’re happy to help you understand the details before you sign.
Ready to review your options? Contact STAT to start the conversation.
