The aspect of land use that categorizes land by desired use and other features and then maps these zones within the municipality. Zoning is what (hopefully) keeps factories from being built next to houses. Again, this is determined by the municipality and is almost always predetermined.
Due Diligence – First Steps
You have identified a community in which you wish to practice and have a general notion of what type of property that interests you (storefront, medical office building suite, raw land, etc.). So when you locate a possible property what do you look for? Before getting too far along with a negotiation, start your due diligence early by taking a look at several top level items:
• Legal use. Is a dental office allowed on this property? Don’t assume that just because there is a dentist next door that the same use is allowed on your site as well. A real estate agent maybe able to tell you, at least generally, if dental offices are allowable on the site. An architect or city official can most likely give you a more definitive answer.
• Change of use. Would your dental office be a different use than what occupied the site before? If so, then this may be considered a change of use. Changes of use are sometimes granted outright. But often municipalities cite a change of use as a trigger for bringing a property up to current building code. In other words, previously legal aspects of the property may become illegal. Needing a change of use should not preemptively dissuade you from pursuing a particular property, but it is critical to understand if your project will trigger a change of use.
• Access. Can patients and staff get to the location? Is it on a one way street? Where is the front door? Will you have enough visibility? If the site is vacant land, will you need to build a driveway or access road? Front doors are a patient’s first impression. Try to visualize the front door experience now.
• Utilities. Are all utilities on site? If so, are they connected to your building? Utilities include:
• Electricity
• Gas
• Water
• Fire connection (not the same as water for day-to-day use)
• Sewer
• Storm drain (not always the same as sewer)
• Telephone
• Internet
• Setbacks, buffers and easements. When buying property, you should consider asking about these types of restrictions early on. Setbacks and buffers are restrictions on portions of properties adjacent to other properties, public land or environmental features. Easements are contractual agreements between the property owner and others that have the net effect of limiting your use of the property. All of these restrictions transfer with changes in ownership so you are generally stuck with them. Understanding how setbacks and buffers impact a property can often be figured out by researching online at the city website, or with a visit to town hall. Easements are usually revealed in a preliminary title report.
• Square footage. Is there enough land available to build your building and parking? Keep in mind that going up an additional story may cost a lot of money. Upper floors typically require elevator service and some duplication of building services like mechanical equipment. Rentable area is a metric used to charge tenants for a fair share of common building areas like lobbies, bathrooms, and utility spaces. Unless you are renting the entire building, rentable area is always greater than the actual area you will use. Rentable area can be expressed as increasing the tenant space by a “load factor.” Load factors vary greatly but 15 percent is common for office spaces with lobbies and common bathrooms. Closer to 10 percent is appropriate for simpler buildings without lobbies, etc.
• Parking. Parking can kill a project — and not always in the way you may expect. Sometimes a municipality imposes required parking. The financial and square foot burden of constructing parking can swamp the project budget and make the site undevelopable for dental or medical uses. Alternatively, parking can be in short supply and your practice cannot thrive without parking available. This can be especially true for offices in urban areas.
Consult your tax advisor or accountant for a statement of tax and accounting rules applicable to your particular situation and for all other tax and accounting advice.
There are a few metrics to quickly evaluate your parking needs. An easy rule of thumb for parking is one space for each doctor and staff member and one and one half spaces for each treatment chair. This can add up quickly with fifteen plus spaces for a six chair practice. Another way to estimate parking is to apply a ratio of one space per 200 square feet for office space.
For more car-oriented locations, parking ratios in the range of one space per 125 square feet are not uncommon. But many cities are dealing with heavy traffic find more people carpooling and taking public transportation. Recent traffic studies in suburban Seattle found an average need of one space per 225 square feet for medical/dental clinics.
Finally, how much square footage do your parking spaces need? For new lots, assume 325 square feet for each space. 325 square feet per space gives you room for drive aisles and accessible spaces. So, building a 2,700 square feet practice with 15 parking spaces (using the 1:200 ratio) would require another 4,875 square feet of land set aside for parking. Your particular parking needs may vary, but this is a good starting point.
FIGURE 3.1
Due Diligence – Phase Two
So you have identified a property that has a good location and seems to pass all the tests outlined above without any major hurdles. The next step is a more thorough due diligence process where you revisit all of the previous issue in greater deal and expand the scope of your investigation to some new areas. While it is difficult to put money and effort into a property that you may walk away from, the flip side is you may avoid making a financial mistake for your practice. The time and expense spent in due diligence may be good insurance for your property investment.
Surveys and As-Builts
If you are buying land, a survey is vital. A properly executed survey can reveal easements, encroachments, misrepresentations of lot size, etc. A survey can also give you a reliable background map on which to plan your project. Without a survey, your design efforts may be hamstrung from the beginning. Appendix 1 at the end of this chapter lists items that a surveyor should include in a land survey.
Surveys for leased space are sometime called as-builts or measuring services. Do not assume the square footage offered by the real estate agent is accurate for your purposes. As noted previously, it is an industry standard to increase the actual square footage number to cover to use of building common areas. A building measuring service can laser measure and draft a typical six chair dental office for a less than a thousand dollars. This drafted plan also gives you a good background on which to prepare you own design.
The time and expense spent in due diligence may be good insurance for your property investment.
Title Report
A title report goes hand in hand with the land survey. The preliminary title report will likely identify easements or other legal encumbrances (like an extra height restriction) that are often not readily visible on site. Sometimes the surveyor can order a preliminary title report, or the realtor representing the property can get one. Make sure you read and understand the report. Ask questions. Most loans bank require title reports and this step is usually easy and often free. Don’t pass on this opportunity.
Feasibility Study
At a minimum, a feasibility study should identify setbacks, buffers, height restrictions, legal uses, building size limits, use size limits, parking requirements,