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Medical Office Space in the North Bay: Leasing or Buying

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Medical office space is office space built or adapted for patient care, and finding the right suite comes down to four checks: the zoning allows medical use, the building meets accessibility rules, the build-out matches whether your practice is a licensed clinic, and the lease or purchase budget covers the tenant improvements. Physician, dental and therapy practices in Santa Rosa, Petaluma, Napa and San Rafael face the same checklist, though each city applies its own zoning code.

A suite that works for a law firm can be expensive to convert for exam rooms, sinks and imaging. This guide explains what to confirm before you sign a letter of intent, the lease terms that matter most to a practice, and how buying compares with leasing. It is part of our commercial real estate services.

How medical space differs from ordinary office

The differences show up in the walls, the plumbing and the parking lot. Use this table as a list of questions to ask about any suite you tour.

Item	What to ask
Plumbing	Can sinks be added in exam rooms, and where are the existing waste and supply lines?
HVAC	Can rooms be zoned separately, and what does after-hours service cost?
Electrical	Is there capacity for imaging, sterilizers or dental equipment?
Accessibility	Are the entrance, restrooms, parking and path of travel accessible, and is there a CASp report?
Parking	Does the site meet the parking ratio the city requires for medical use, which may differ from general office?
Imaging	Will an X-ray room need shielding, and who designs it?
Hours and signage	Can patients reach the suite during your hours, and can you put your name on the building?

Many of these answers depend on the building’s construction and age. A 1980s office building and a newer medical office building can look the same on a flyer and cost very differently to fit out.

Confirm medical use is allowed

Each city and county decides where medical offices may operate, through the land-use table in its zoning code. A suite in an office park can still be in a zone that limits medical use, requires a use permit for it, or applies a higher parking ratio. Check the parcel’s zoning and the use definition before you negotiate rent.

Ask the planning counter three questions for the address: whether your type of practice is permitted, permitted with a use permit, or not allowed; what parking standard applies; and whether a change of use triggers other upgrades. Our commercial due diligence checklist lists the documents to gather at the same time.

Physician office or licensed clinic: when OSHPD 3 applies

California’s health facility building standards are administered by the Department of Health Care Access and Information (HCAI), formerly OSHPD. Its April 2026 Advisory Guide A17 explains that the Title 24 “OSHPD 3” requirements apply only to clinics licensed under Health and Safety Code section 1200, or to outpatient services of a licensed hospital under section 1250.

Licensure decides it. HCAI says applicability is independent of occupancy classification. A doctor’s office is subject to OSHPD 3 only if it is licensed as a clinic.
Who enforces. The local building department handles plan review, permits and inspections for OSHPD 3 clinics. HCAI notes it is statutorily prohibited from reviewing plans for primary care clinics.
Exceptions. HCAI can take on plan review in limited cases, such as certain surgical or dialysis clinics and freestanding hospital outpatient buildings, when the operator requests it.

The practical point: tell your architect and the landlord early whether the practice will be a licensed clinic. A licensed clinic’s build-out can cost more and take longer to permit. The California Department of Public Health licenses clinics, separately from the building permit.

Accessibility and the CASp disclosure in your lease

Patients come to you, so accessibility is part of the business, not just the building code. California’s accessibility standards are in Chapter 11B of the California Building Code, and tenant improvements can trigger path-of-travel upgrades. Our guide to CASp inspections and ADA compliance explains the inspection itself.

Civil Code section 1938 adds a lease disclosure for commercial space used as a place of public accommodation:

Every lease signed on or after January 1, 2017 must state whether the premises have had a CASp inspection.
If there’s no inspection certificate, the lease must say that a CASp can inspect the premises, that state law doesn’t require one, and that the landlord can’t stop you from getting one.
The lease must then say who pays for any inspection and who pays for repairs it identifies.
If a CASp report exists, the landlord must give you a copy before signing. If it isn’t provided at least 48 hours before you sign, you may rescind within 72 hours.

Correcting violations noted in a CASp report is presumed to be the landlord’s job unless the lease says otherwise. Read that clause before you sign.

Imaging, privacy and specialized rooms

State regulations say every person possessing a reportable source of radiation must register with the Department of Public Health. For X-ray equipment, contact the Department’s Radiologic Health Branch about registration and any shielding requirements before you design the room.

Patient privacy rules affect how a practice handles records and conversations, and that can shape the layout of check-in and records storage. Your compliance adviser, not the landlord or broker, should decide what the layout needs. Write those needs into the space plan so the improvement budget reflects them.

Other specialized items, such as medical gas, sterilization rooms or lab space, belong in the work letter with a clear allocation of cost. Our guide to the tenant improvement allowance covers how allowances are paid and who owns the improvements.

Lease terms that matter for a practice

Use clause. Name your specialty and any procedures, imaging or lab work, so the landlord can’t object later.
Exclusive use. In a multi-tenant building, ask whether the landlord will agree not to lease to a competing practice.
Improvements and restoration. Agree on who pays for exam room plumbing and shielding, and whether you must remove them at lease end.
HVAC and hours. Confirm included hours and the rate for after-hours service.
Assignment. A practice sale often means assigning the lease. Make sure the clause allows a qualified buyer of the practice.
Term and options. Build-out costs argue for a longer term with renewal options, so you can recover your investment.
Expense structure. Know whether the lease is gross, modified gross or net. Our guide to commercial lease types compares them.

Our guide to negotiating a commercial lease covers letters of intent and counteroffers in more detail.

Buying a medical office building or condo

Practices that expect to stay for many years often compare leasing with owning. Ownership gives you control of the build-out and the building’s future, but ties up capital and makes you responsible for the systems. Our owner-user guide walks through that decision.

The SBA 504 program is designed for owner-occupied commercial real estate. The SBA says 504 loans can finance buying, building or renovating buildings or land, and long-life equipment. Loans are made by certified development companies working with a senior lender, at fixed rates tied to the 10-year Treasury, with 10-, 20- and 25-year terms.

The SBA’s page gives a $5.5 million maximum in its text but $5 million in its summary, so confirm the current limit with a lender. 504 loans can’t be used for working capital, inventory, or speculation in rental real estate. For a comparison of programs, see SBA 504 vs 7(a).

Diamond may refer you to partners we work with; you’re free to choose any provider.

Where to look in the North Bay

Common search criteria for a practice include distance to a hospital campus, patient parking and access from main roads. Each city has its own zoning and permit counter, so the checks above apply suite by suite. Our county pages for Sonoma County commercial property and Napa County commercial property describe those markets, and our San Rafael page covers that city.

This is general information, not legal advice; talk to a California commercial real estate attorney and your licensing consultant about the lease and the build-out.

Questions people ask

Does a doctor’s office need to meet OSHPD 3 standards?

Only if it is licensed as a clinic under Health and Safety Code section 1200, or is outpatient space of a licensed hospital. HCAI’s Advisory Guide A17 says licensure, not the type of service or occupancy, decides whether OSHPD 3 applies.

Who reviews the plans for a medical office build-out?

For most projects, the city or county building department. HCAI says local departments enforce OSHPD 3 for licensed clinics, and it reviews plans only in limited cases, such as certain surgical or dialysis clinics, on request.

What should a medical office lease include?

A use clause naming your specialty, a clear split of improvement costs, after-hours HVAC terms, an assignment clause that works for a practice sale, renewal options, and the CASp statement Civil Code section 1938 requires.

Do I need a CASp inspection to lease medical space?

State law doesn’t require one, but the lease must state whether the space has been inspected. If it hasn’t, the landlord can’t stop you from getting one, and the lease must say who pays for it and for any repairs.

Can I use an SBA 504 loan to buy a medical office building?

SBA 504 loans finance owner-occupied commercial real estate, including buying, building or renovating. They can’t be used for speculation in rental real estate, and a lender will confirm whether your practice and building qualify.

Is dental office space different from medical office space?

The questions are similar but more detailed. Ask your designer whether each operatory can get plumbing, vacuum and air lines, and where X-ray units will go, then confirm the landlord will allow that work.

Planning to lease a suite or buy a building for your practice? Contact Diamond and we’ll screen spaces for zoning, accessibility and build-out fit before you tour.

Sources & notes

Last reviewed October 2026 by Matthew Martinez.