Vacancy is expensive, but a bad lease is worse
Owners under vacancy pressure tend to optimise for speed: take the first credible tenant, give whatever concessions close the deal. The problem is that your building is valued on the income stream you just created. A short term at below-market rent with heavy tenant improvement allowance can reduce the asset’s sale value by more than several months of vacancy would have. We underwrite proposals against what they do to the building’s value, not just against the rent roll next month.
Healthcare tenants are sourced differently
Medical tenants do not find space the way general office tenants do. They move when a practice expands, a partner retires, a lease expires near a referral source, or a health system reshapes its outpatient footprint. Reaching them means working practice brokers, healthcare-focused tenant reps, and the systems themselves — not posting a listing and waiting. Because we transact across Hampton Roads continuously, we usually know which practices are approaching a lease decision before they are formally in the market.
Terms that protect the asset
The clauses that matter most are rarely the headline rent. Escalation structure determines whether income keeps pace with expenses. Renewal options at fixed rents can cap your upside for a decade. Exclusivity provisions granted to one specialty can make the rest of the building unleasable to the obvious candidates. Assignment and subletting language determines what happens when a practice is acquired — increasingly common as groups consolidate. We negotiate these as a package, with an eye on what a future buyer will underwrite.