Urgent Care and Medical NNN Properties for Sale
The world of medical triple-net lease tenants continues to grow – and these tenants are typically dependable, good for producing reliable income streams, and financially stable. Whether you choose an urgent care provider, medical offices, dental offices, or a veterinary clinic, you’ll enjoy high-quality tenants who often stay for a long period of time.
Both people and pets need health services no matter what – the urgent care and medical industry is a recession-resistant one. Geopolitical circumstances, pandemics, and even economic downturns can’t keep people from addressing their medical needs. That means that these businesses often build loyal customer bases and thrive.
Urgent Care and Medical NNN Properties Overview
Many urgent care and medical triple-net lease tenants end up leasing properties for extended periods of time. Why? These tenants prioritize location convenience for their customers, plus they typically make major investments in customization and build-outs to their properties. For that reason, ground leases are increasingly common in this domain.
With over 2 million businesses in the healthcare and social assistance sector in the United States as of 2023, urgent care and medical triple-net lease tenants are booming. Plus, it’s a major spot for consumer spending. In fact, the U.S. healthcare industry is so massive that healthcare spending accounts for over 18% of the U.S. GDP (gross domestic product).
| Urgent Care and Medical Triple-Net Properties Overview | |
| Well-known tenants | DaVita, Fresenius, Aspen Dental/td> |
| Number of business entities | 2,869,903 |
| Average NNN lease property cost | $2,500,000 |
| Average cap rate | 4.8% |
| Typical lease term | 15 years |
| Average lot size | 1.0 - 2.5 acres |
| Typical location | Suburban areas near hospitals or medical office parks |
Common Urgent Care and Medical NNN Lease Tenants
The best-known nationwide triple-net lease medical and dental clinics include household names like DaVita, Fresenius Kidney Care, and Aspen Dental. But this industry is unique in that many U.S. regions offer triple-net lease urgent care, veterinary, and dental clinics that are specific to the area and branded as such.
For example, think of Pacific Dental or Midwest Kidney Centers. Medical clinics like these (and other urgent care clinics, too) are typically very attractive triple-net lease tenants because of their low-maintenance nature and long-term commitment. In this sector, absolute triple-net leases prevail, and triple-net ground lease opportunities are popular as well.
Why Choose a Net Lease Over a Gross Lease When Investing in Commercial Real Estate?
Gross leases and net leases are essentially opposites – and commercial real estate investors can see many benefits when they opt for the latter. Let’s define the differences between these two options in order to understand the benefits of net leases.
Gross leases charge tenants a predetermined amount in order to rent a space. That rent value doesn’t fluctuate based on operating expenses, as gross leases will hold landlords accountable for operating costs. Net leases differ from gross leases in that they allow landlords to hand operating expenses off to their tenants.
As you browse commercial real estate investments, you’ll likely notice that there are three tiers of net leases out there: single, double, and triple. These are otherwise known as N, NN, and NNN leases. With each increasing level, the landlord can pass more and more expenses to their tenants, freeing themselves of more risk as the tiers go up.
Single-net (N) leases pass property taxes over to the tenant (in addition to the cost of rent, of course), but the landlord is still on the hook for insurance, maintenance, repairs, and utilities. Single-net leases are less prominent when it comes to commercial real estate. Double-net (NN) leases and triple-net (NNN) leases are much more common.
What Types of Net Leases Are Common in the Urgent Care and Medical Industry?
In the urgent care and medical industry, triple-net leases (also called “absolute net leases”) are by far the most common option. But within this category, there are a few different variances that commercial real estate investors should consider.
Because medical and urgent care tenants often need to make customizations and complete build-outs on a property, many of the triple-net leases used here are also ground leases. So what exactly does that mean? Well, a ground lease allows the tenant to develop a piece of property during the term of the lease. When the lease is over, the land (and all improvements done on it) are turned over to the property owner.
Ground leases often involve the tenant paying a slightly lower rent. First off, that’s because they’re responsible for not only rent but also operating expenses and costs related to the property, such as insurance premiums, property taxes, and structural maintenance or repair costs. Plus, since the tenant is developing or adding to the property, you, as the investor, may be able to sell it for a higher value down the road.
How to Evaluate an Urgent Care and Medical Net Lease for Sale
No matter what tenant you are considering, it is crucial to assess both property value and tenant strength when considering any triple-net lease. Especially when you’re reviewing single-tenant properties, like the ones most medical and urgent care tenants prefer, your tenant concentration can be only either 100% or 0%. In other words, you’ll generate 100% of your potential cash flow or none of it.
In order to ensure that your triple-net lease pans out, you need to choose a property that meets the criteria that medical and urgent care facilities prefer in their locations – usually suburban areas near hospitals or medical offices. That will help you make sure that the tenant remains in the property and that you keep generating revenue.
This is especially important because of the distinctive nature of these properties. Because of their customizations and unique footprint, medical and urgent care buildings can be challenging to fill if the tenant leaves. Therefore, you want to make sure to select a high-traffic location where the tenant will thrive and stay for years to come.
What Makes Urgent Care and Medical an Attractive Industry for NNN Leases?
The urgent care and medical industry is an attractive industry for triple-net leases because it responds to a perennial need: healthcare. The healthcare sector has proven to be recession-resistant time and time again, and it’s an excellent place to invest. These tenants are particularly attractive because of their long-term leases and ground leasing opportunities.
How Do Urgent Care and Medical NNN Properties Compare to Others?
The best triple-net lease investments are those that are able to offer landlords reliable, consistent cash flow. In other words, you need an investment-grade tenant who will be there for the long haul – and ideally, you’ll want one that offers rent escalations throughout the primary term. Plenty of tenants in the urgent care and medical sector meet those criteria.
With typical lease terms beginning at 15 years and only increasing from there, the urgent care and medical industry is attractive from the get-go. The real estate here is also generally a solid investment, as custom build-outs and construction on ground leased properties will enhance the property value over time. This is a great sector for beginner commercial real estate investors and seasoned pros alike.
