If you’re the owner of a medical practice and have a vacant room, you might be missing out on an enticing avenue to increase your overall profitability of your practice. Renting out this commercial space to another health professional can maximise your income, but the question often asked is, “how much do I charge?”
There are a few key factors to consider when pricing your medical room to rent. From looking at the commitment required to the services and amenities included, current market forces and whether your rent is inclusive or exclusive, you’ll soon establish the perfect price for this additional income stream.
The Rental Commitment Required
The first critical question to ask is, “What type of rental commitment can the new practitioner make?”. Some health professionals may only require a single session per week, while others might be looking at a permanent relocation and requiring a complete set-up.
You’ll also need to know whether they are an established practice with an extensive patient list or are they just starting out, with a lower number of patients to tend to. Larger patient lists can generate more internal referrals and the ability to add value, which is something to consider, too.
What Features and Amenities Are Included?
Assess the room which you’ll be renting out and the potential tenant. Is it fitted out already, or will it require additional specialist equipment such as an X-ray viewer, screens or trolleys?
You’ll also need to consider whether the health professional will share access to the current administration and/or reception staff. Who will be making their bookings and greeting their patients? And will the room include access to parking? All these questions must be answered prior to confirming the room rental price.
Research Market Forces
No wise decision is ever made without thorough research. Look at the current commercial rent market and assess what supply and demand are like. Plus, talk to a commercial real estate agent to gauge competitor rates and the current vacancy rates. This can heavily influence how you price a room to rent.
Now is also the time to assess what sort of infrastructure is close by. Can patients arrive easily via public transport or will they need a car? If so, is parking sufficient? Investing in a report from CoreLogic (RP DATA) to help you research is wise, including types such as this: https://www.corelogic.com.au/industries/commercial-real-estate/become-local-expert
What Services are Included?
Before you finalise the rental fee, you need to know if the tenant requires full access to practice admin support such as billing, typing and dictation. They may be bringing their own staff and support, and if so, you’ll need to factor this in as well.
Inclusive or Exclusive?
Before you decide your final price, it’s important to ask, “is my rent inclusive of the operating costs or exclusive?”
If it’s inclusive, it will include all building outgoings:
- such as land tax
- council rates
- building insurance
- and water connection rates
Exclusive means these outgoings are passed on to the tenant to pay separately.
Current National Rental Rates
Based on a 35sqm room that includes reception and greeting personnel and excludes administration processes and parking, a four hour session would cost approx.:
- Brisbane (within 50k radius): $150 – $180
- Sydney (within 50k radius): $150 – $250
- Melbourne (within 50k radius): $150 – $200
- Perth (within 50k radius): $150 – $180
Leasing the room to a new practitioner is the beginning of an exciting business relationship. The ultimate goal is for both parties to be content so the practice runs smoothly. That’s why it’s so important to do your due diligence. And remember, like any relationship, it’s about give and take and sometimes adaptability is essential to fit the new practitioner. Don’t forget, if a challenge arises, contact your Commercial Real Estate Agent. They deal with this every day and know how to handle this process best.
If you’re looking to advertise a room in your practice, Medical Rooms Online can assist. We are a centralised and specialist website for the health industry, we connect people looking for property all across Australia. For more information, click here or contact 1300 28 28 03.