The TI number keeps climbing on a dental suite going to imaging

You're buying a seven year annuity and building a permanent single purpose asset to hold it. That's the whole trade. When the term ends, the shielded room and the pad are worth something only if the next tenant does the same procedures, and the pool of tenants who do imaging in a 4,400 sf suite in one submarket is small. I hold land because bad decisions there are reversible. That room isn't.

Run the effective rent before the design conversation goes further. $660k over 84 months is about $7,850 a month of capital, which on 4,400 sf is roughly $21 psf per year against $38 psf of face rent. You're netting $17 before any leasing commission, before the free rent you'll end up granting, and before the cost of carrying that capital. If you amortize the TI into rent at a rate you'd accept, say a return on the improvement dollars, face rent has to be in the mid $60s on a seven year deal for the economics to look like the $38 deal you think you're signing.

Two structural fixes are normal in this space. Split the work, so the landlord funds shell and base building items with residual value, roof, service, HVAC capacity, slab, and the tenant funds the shielding and anything tied to their equipment, with you contributing a fixed allowance. Or hold the $150 and demand term, because a 12 or 15 year lease changes the amortization arithmetic more than any vendor negotiation will.

Also check your lender. Many won't advance against tenant improvements on a single tenant specialty suite at the same proportion they'd advance on the building, so that $660k may be equity out of pocket rather than financed.

The part that isn't in your post is the reimbursement side. Outpatient imaging volumes and rates move with payer policy and prior authorization practice, and a tenant whose procedure mix gets repriced doesn't become a bad tenant on day one, they become a tenant asking to restructure in year four. Ask for their payer mix and their referral sources, because if one orthopedic group sends them most of their volume, you're underwriting that group too.

Can the shielding be structured as tenant property they remove and take with them? If it's theirs, they've got their own capital in the room and you're not paying for something that only helps them. Genuine question, I don't know if the vendors sell modular systems that come out cleanly.

Reading this thread has fully cured me of wanting to own a single tenant imaging suite. $660k of my money into a lead room for seven years of somebody else's equipment plan is a job, not income.

Before the slab, check the parking count and the use classification. Imaging pulls patient trips per hour that a dental suite didn't, and in a lot of municipalities a change in medical use category triggers a parking calculation or a conditional use permit review, which varies town by town. I've seen an entire build stall on a nine stall shortfall. Read your ordinance's medical office definition, some of them treat diagnostic separately from office.

Who owns the shielded room at the end of the lease if the landlord paid for it? Is it a fixture that just stays, or does the tenant have a removal obligation?

A broker told me imaging tenants insist on ground floor with drive-in or knockout panel access, and that a 3T pushes the shielding and chiller costs meaningfully above 1.5T. So harrow's on the cheaper end of that spectrum already. He also said the equipment path is the item that blows schedules, because it needs the crane, the roofer, and the vendor's install crew on the same day.

Saw cutting and repouring an interior pad with dowels into existing slab, plus shoring and dust containment on an occupied building, isn't a small line. Budget the containment, not just the concrete. And the chiller pad, disconnect and condensate routing tends to show up as a change order because nobody drew it.

Different read from orchard. Pay the $660k and refuse to sign anything under 12 years with 3% bumps and a fully personal or corporate guaranteed obligation. You're effectively lending them the equipment build at a rent spread, and imaging tenants with a bolted magnet renew at a very high rate. The mistake in the deal as posted is the seven year term, not the dollar amount.

If you fund it, the disbursement mechanics matter as much as the number. Draws against lien waivers and AIA style documentation, retainage held, and no final draw until the certificate of occupancy and the tenant's own equipment sign off. Also look for a tenant termination right conditioned on failing to get a facility license or, in states that still have certificate of need review for imaging equipment, on that approval. If they can walk because a regulator says no and you've already poured the pad, you own a hole. That clause shows up in imaging LOIs more often than people expect.

From a pricing standpoint the finished product is a single tenant specialty box with seven years left, and buyers will underwrite it at a wider cap than the multi-tenant clinic you own today. Keystone's twelve year version is the only one that sells at a good number, because at year five of a seven you're marketing a rollover risk with a $660k re-tenanting bill behind it.

The sticky equipment argument seemed to settle it for me, and now I'm less sure. The tenant's capital is in the magnet, the landlord's capital is in the room, and only one of those can be picked up and moved to a competitor's building. Still turning that over.