Professional services
Medical Practice Rent Cost Calculator
Works occupancy cost, where rent involving referral sources is a regulated arrangement.
Result
Two things make a quoted rate misleading and both are here. The load factor means you pay rent on a share of lobbies and corridors, so the square footage you are billed for exceeds what you can use, and a high load factor building at an attractive rate can cost more than a low load factor building at a higher one. The lease structure matters just as much: a triple net rate looks far cheaper than a full service gross rate for the same space because taxes, insurance and maintenance are simply not in it yet. Comparing a triple net quote against a gross quote on the headline rate is the single most common error in commercial leasing. Clinical fit out is also expensive relative to office, and an allowance rarely covers it, so the shortfall is capital you find yourself.
Get a Free Business AuditHow the calculation works
Base rent plus common area charges, utilities, taxes and insurance where the lease passes them through, totalled annually and per square foot, with the cost per provider and per visit shown. Cost per visit is the figure that connects occupancy to the economics, since space is a fixed cost spread across throughput.
What moves the number
- Rentable against usable square footage.
- Pass-through charges, which can be substantial.
- Visits per month, which spread the fixed cost.
- Lease term and escalation clauses.
Where this one goes wrong
Where a practice leases space from, or to, a physician or entity in a position to refer patients, the arrangement is subject to the physician self-referral rules and the anti-kickback statute, which require written terms, commercially reasonable arrangements and rent at fair market value. Rent above or below market in such an arrangement is a serious regulatory exposure regardless of intent, and these arrangements need legal review rather than a calculator. On the commercial side, rentable square footage exceeds usable, so cost per usable foot is the honest comparison between options.
Before you quote
- Have any lease with a referral source reviewed for compliance.
- Compare on usable square footage, not rentable.
- Include pass-through charges in the total.
Where the rules come from
Questions
About this calculator
Are there rules about who a practice rents from?
Yes, where the landlord or tenant is in a position to refer patients. The physician self-referral rules and the anti-kickback statute require written arrangements at fair market value, and rent above or below market is a serious exposure. Those arrangements need legal review.
Why is quoted square footage misleading?
Because rentable footage includes a share of common areas while usable footage is what you can put rooms in, and the gap varies by building. Comparing options on rent per usable foot is the honest comparison and frequently reverses the apparent ranking.
How should occupancy cost be judged?
Per visit, since space is a fixed cost spread across throughput. The same rent is reasonable at one volume and burdensome at another, and expressing it per visit connects the lease decision to the practice's actual economics.
The formula
rentable = usable x (1 + load factor); occupancy = rentable x annual rate + operating expenses; final year = first year x (1 + escalation) to the power of term minus one
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How to use this calculator
- Usable square feet. Enter your own figure; the page starts at 3,200.
- Load factor (%). Share added for lobbies, corridors and shared restrooms. You pay rent on it.
- Rate is quoted. Enter your own figure; the page starts at Per square foot per year.
- Base rent rate ($). Enter your own figure; the page starts at $28.
- Lease type. Enter your own figure; the page starts at Triple net, you pay taxes, insurance and maintenance on top.
- Operating expenses per square foot per year ($). Enter your own figure; the page starts at $9.5.
The result updates as you type, so you can try a figure, see what it does to total occupancy cost, first year, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Usable square feet | 3,200 |
| Load factor | 15% |
| Rate is quoted | Per square foot per year |
| Base rent rate | $28 |
| Lease type | Triple net, you pay taxes, insurance and maintenance on top |
| Operating expenses per square foot per year | $9.5 |
| Annual rent escalation | 3% |
| Lease term (years) | 7 |
| Tenant improvement allowance per square foot | $45 |
| Fit out cost per square foot | $120 |
| Providers | 3 |
| Visits per year | 21,000 |
| Annual collections | $2,400,000 |
What comes out
| Result | Value |
|---|---|
| Total occupancy cost, first year main result | $138,000 |
| Rentable square feet you pay for | 3,680 |
| Base rent | $103,040 |
| Operating expenses you pay | $34,960 |
| Per month | $11,500 |
| All in cost per rentable square foot | $37.50 |
| Occupancy cost per provider | $46,000 |
| Occupancy cost per visit | $6.57 |
| As a share of collections | 5.7% |
| Fit out cost above the allowance | $240,000 |
| Total in the final lease year | $164,779 |
You occupy 3,200 usable square feet but pay rent on 3,680 after the load factor. First year occupancy is $138,000, or $37.50 per rentable foot all in, against a quoted 28. That is $6.57 per visit and 5.7% of collections, rising to $164,779 by the final year.
How sensitive the answer is
Holding everything else steady and changing only base rent rate, this is what happens to total occupancy cost, first year. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Base rent rate ($) | Total occupancy cost, first year |
|---|---|
| $14 | $86,480 |
| $21 | $112,240 |
| $28 example above | $138,000 |
| $42 | $189,520 |
| $56 | $241,040 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Usable square feet
- A number, between 0 and 500000, starting at 3,200.
- Load factor (%)
- Share added for lobbies, corridors and shared restrooms. You pay rent on it.
- Rate is quoted
- Choose from Per square foot per year, Per square foot per month.
- Base rent rate ($)
- A money amount, between 0 and 500, starting at $28.
- Lease type
- Choose from Triple net, you pay taxes, insurance and maintenance on top, Full service gross, operating costs included, Modified gross, you pay some operating costs.
- Operating expenses per square foot per year ($)
- A money amount, between 0 and 200, starting at $9.5.
- Annual rent escalation (%)
- A percentage, between 0 and 20, starting at 3%.
- Lease term (years)
- A number, between 1 and 50, starting at 7.
- Tenant improvement allowance per square foot ($)
- A money amount, between 0 and 500, starting at $45.
- Fit out cost per square foot ($)
- Clinical fit out runs well above general office because of plumbing, gas, shielding and casework.
- Providers
- A number, between 1 and 200, starting at 3.
- Visits per year
- A number, between 0 and 5000000, starting at 21,000.
- Annual collections ($)
- A money amount, between 0 and 500000000, starting at $2,400,000.
What the results tell you
| Result | What it is |
|---|---|
| Total occupancy cost, first year | The headline result. A money figure. |
| Rentable square feet you pay for | A number. |
| Base rent | A money figure. |
| Operating expenses you pay | A money figure. |
| Per month | A money figure. |
| All in cost per rentable square foot | A money figure. |
| Occupancy cost per provider | A money figure. |
| Occupancy cost per visit | A money figure. |
| As a share of collections | A percentage. |
| Fit out cost above the allowance | A money figure. |
| Total in the final lease year | A money figure. |
Keep going
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