Medical office loans.
The basics
Medical office is the strongest corner of the office market, and lenders treat it that way. Practices build out expensive suites, plant themselves near their referral sources, and stay.
Medical office never absorbed the change in how companies use space. Patients still come to the building. So while the broader office market has tightened and lenders have grown selective about the rest of it, clinical demand held, and the list of institutions willing to quote reflects that.
The reason lenders like this asset class comes down to one thing: the tenants cannot leave cheaply. A dental suite, an imaging center, or a surgical practice has plumbing, gas lines, shielding, dedicated power, and equipment anchored to that floor plan, most of it paid for by the tenant. Walking away means abandoning that investment and asking every existing patient to learn a new address. Practices renew instead.
That behavior shows up in the numbers a lender cares about. Renewal rates run high, downtime between tenants runs long but happens rarely, and rent collection tends to be steady through cycles. It is a durable income stream attached to a building that is expensive to reproduce.
The one caution lenders carry is the other side of the same fact. When a specialized suite does come back, it is slow and costly to re-lease, because the next practice may need different plumbing, different power, or a different layout entirely. So lenders look at the specialty mix and ask how transferable each suite would be. A general practice suite backfills more easily than an imaging vault.
Proximity to care drives the demand
In conventional office, location means access, parking, and amenities. In medical office it means proximity to referral flow.
Buildings on a hospital campus, directly adjacent to one, or clustered around a surgery center draw demand from practices that need to be near admitting privileges, specialists, and the procedures they perform. That gravity is why on-campus and near-campus medical buildings hold occupancy through soft markets, and why lenders underwrite them more comfortably.
Off-campus medical is financed all the time, but the story changes. There the strength comes from the practices themselves, their patient base in that submarket, and how much they have sunk into their suites. Both versions work. They simply go to different lenders, which is why we ask about the campus relationship early.
Practices buying their own building
A large share of what we place in this category is not an investor deal at all. It is a physician group, dental partnership, or veterinary practice that has been paying rent for years and decided to own the space instead.
That is a different financing path. When your business occupies enough of the building, the deal is owner-occupied, and SBA and conventional bank programs built for owner-users come into play. Those programs look at the practice as much as the property, which usually works in a stable practice’s favor.
If that is your situation, tell us how much of the building you occupy and how long the practice has been operating. Those two answers determine most of the lender list before we look at the real estate at all. No credit pull, no cost to start.
What lenders look at.
The things that move a medical office file from "maybe" to a real quote.
Tenant stickiness and lease history
A practice that has renewed twice and spent its own money on plumbing, shielding, and equipment rooms is not casually relocating. Lenders read renewal history as a proxy for future occupancy, and medical tends to read well.
Proximity to a hospital or campus
Location relative to the anchor hospital, surgery center, or health system campus drives demand for the suites. On-campus and adjacent buildings are read differently than a general office building with medical tenants in it.
Specialty mix among the tenants
Imaging, dental, dialysis, ophthalmology, and primary care carry different equipment loads, patient volumes, and reimbursement exposure. Lenders look at the blend rather than treating all medical tenants as one thing.
Condition of the improvements
Medical suites carry plumbing, electrical, HVAC, and sometimes lead shielding well beyond standard office. Lenders check whether that infrastructure is current, because replacing it is expensive.
Health system or physician group involvement
Whether the building is leased to a system, to independent practices, or to a group the sponsor is part of changes the credit picture and often changes which lenders will quote.
How these deals are usually structured.
Every lender prices differently and every file is its own case. Treat this as the shape of a typical medical office deal, not a quote.
- Loan amount
- Generally $500,000 and up.
- Common capital sources
- Banks, credit unions, life insurance companies, CMBS, and private money. SBA is available when a practice occupies enough of its own building.
- Typical purposes
- Purchase, refinance, cash-out refinance, practice buyouts of a leased building, and build-out or expansion financing.
- Rate structure
- Fixed and floating both exist. Owner-occupied practice deals often go long fixed.
- Timeline
- A soft LOI quote often within 24 to 48 hours once your scenario matches a lender's guidelines, and a hard LOI in one to two weeks.
Terms depend on the property, the sponsor, and the lender. Nothing here is a commitment to lend.
Other office we finance.
Different property, same process.
Or see everything under office.
Loan types we place on medical office.
Medical office questions.
Still have a question about medical office? Start a request and our team will get you an answer.
Very commonly, and often on better terms than an investment purchase. If your practice occupies enough of the space, the deal can be treated as owner-occupied, which opens SBA and bank programs built for exactly this. Tell us how much of the building you use.
No. On-campus and adjacent buildings draw the deepest interest, but off-campus medical office is financed constantly, especially where the practices are established and the suites are purpose-built. Location changes the lender list more than it changes whether the deal gets done.
Similar to any concentrated tenancy. The lease term, the specialty, and how much the practice invested in its own suite carry the file. A practice with imaging equipment and years of patient traffic in that location is a different risk than a tenant that could move next quarter.
Sometimes within one loan, sometimes as separate facilities. Tell us the scope early. Suite conversions and equipment-heavy improvements route to specific lenders, and planning it up front is far cheaper than restructuring later.
In our experience, yes, and lenders will say so directly. Occupancy has held up better, tenants relocate less, and the improvements bind the practice to the space. That does not make it automatic, but the active lender list is meaningfully longer.
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