When Dr. Irene Voo began practicing in Las Vegas in 2005 as an ophthalmologist, she was with Retina Consultants of Nevada, working out of a different office almost every day.
A decade into her career, Voo decided to lease a space to hang her own hat. She soon discovered, however, that her needs as a retina specialist could be better met by owning her office space rather than leasing.
In 2017, Voo opened a custom-built, 5,500-square-foot medical office condominium on Cimarron Road just south of the 215 Beltway.
“This is my dream office,” Voo said. “I had a 20-year plan for my practice, and I don’t plan on moving again. I think it’s crucial for any small private business to look into [owning] because of the pressures of private equity entering the market more heavily. There’s a lot of pressure to turn a profit.”
While owning office space isn’t something that all small-practice medical professionals are in a position to do, the idea is becoming more popular in the Las Vegas Valley.
Dan Palmeri, director of Cushman & Wakefield’s office properties division, said single-practice medical professionals were almost exclusively leasing space just five years ago.
Today, he thinks that majority is down to about 80 percent. Part of that change, he said, is because of new rules put in place by the Financial Accounting Standards Board that offer more of an advantage to own.
“Because of these changes, it essentially doesn’t matter anymore whether you lease or own when it comes to reporting on a balance sheet,” Palmeri said. “Looking at some other factors, the cost of financing is pretty cheap now, and it’s making sense for people to lock in costs rather than waiting to see if their rent will go up, which it almost certainly always will.”
Justin Witt, an associate partner and medical office specialist with CBRE Group in Las Vegas, echoed Palmeri’s sentiments.
“We are seeing an uptick in people wanting to own versus lease,” Witt said. “The cost of tenant improvements have been increasing ever since the recession, and tenants, especially medical office tenants, are having to [pay] out of pocket maybe $40 per foot. For improvements to a 10,000-square-foot space, that’s a lot of money.” As Witt points out, the tenant wouldn’t necessarily see any benefit from the improvements once the lease period is over.
Owning a property allows for the appreciation of the space over time, which puts individuals such as Voo in a much better position down the road. Owning also allows for control over the space, something that was important to Voo.
“The office space I was in when I first opened a practice met my initial needs, but I wasn’t able to expand to meet the practice’s growth,” Voo said. “I wanted to stay in one location, and I wanted to be here for a long time so patients would know where I am. I also wanted to design a floor plan that would be as efficient as possible so as to cut down on wait times.”
Voo’s space was built by Nigro Construction, which specializes in retail, hospitality and medical office projects.
The company, said president Mike Nigro, is involved in several similar projects, including some in which they’re building and selling off medical office condominium spaces.
“With medical, doctors are spending a considerable amount of money inside their space,” Nigro said. “The trend now is to purchase a building or a portion of a building, and there’s incredible financing out there for these types of projects.”
Most notably, Nigro said, medical professionals are able to get Small Business Administration loans for a building and tenant improvements with as little as a 10 percent down payment.
Nigro Construction, which also has a development arm, is behind a 94,000-square-foot commercial development at Green Valley Parkway and Horizon Ridge Parkway in Henderson.
In early April, a Henderson doctor closed a deal for a 2,500-square-foot medical office condo at the property for almost $544,000.
“As a contractor, we work with the doctors and we help them get their SBA financing so they can purchase portions of a building,” Nigro said. “We then construct it. I’ve probably noticed this being a trend just in the past two or three years. Up until then, there weren’t a lot of office condo projects available, but there’s several of them now.”