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5 Steps to Securing Your Practice Lease

By: Austin  Wheeler

Consider this true-life dental practice scenario: a doctor has been leasing her practice space in a retail location for nearly 15 years. Her original lease was for five years, with two five-year renewal options. The doctor expects to continue her lease arrangement indefinitely as she has a good relationship with the landlord. However, in the 15th year, the landlord decides not to renew her lease as he prefers to use her space for a more lucrative convenience store development. The doctor is caught off guard and must suspend her practice for several months while she searches for a new location. Ouch!

No doctor wants to find himself in this situation. It can have a highly negative impact on both your patient base and cash flow for years to come. So how can you help secure your lease, and more importantly, your practice continuity? What steps should you take if you suddenly find you can't renew your lease?

  1. Don't make assumptions. The first step to securing your lease is not to assume it is secure in the first place. Just because you have an excellent relationship with your landlord doesn't mean he or she won't make a business decision that has a negative impact for your practice. Think like a business person and realize that every contract - whether with employees, associates, or your landlord - is open for negotiation at any time. Then be prepared to negotiate successfully.
  2. Start lease negotiations early. Plan to start renegotiating your current lease about 12 months before it expires. This should give you a "head's up" regarding any potential hurdles to renewing the lease, with plenty of time to conduct a full relocation process if necessary. At the same time you are renegotiating your lease, have your real estate broker start to identify alternate locations for your practice as a back-up. This will help ensure you have enough time for a smooth transition should the negotiations on your current lease fail. An additional benefit to having a potential new location in your back pocket is that it puts you in a stronger negotiating position with your existing landlord. By suggesting that you have an alternate location available, your broker can push for a more beneficial contract.
  3. Use a knowledgeable broker. A commercial real estate broker or professional lease negotiator who is familiar with the dental industry can be invaluable in helping you negotiate your lease. They can save you time and money by conducting due diligence, negotiating lease terms, and minimizing your personal exposure. For example, suppose you have one year remaining on your lease contract, and your broker identifies a new location that would be a significant improvement for you and your patients. Your broker should be able to negotiate with both your current and future landlords to find a middle ground that is satisfactory to all parties. Perhaps your current landlord will agree to a reasonable buyout of the existing contract, and the new landlord will agree to provide free rent during your buildout period. There are any number of ways that an experienced broker can work with your lessors to ease the transition between locations so that you are not paying rent in two places.
  4. Make sure you and your broker are in sync. It is important that you and your broker are strategically aligned going into the negotiation process to help ensure you get the best results and strongest deal possible. For instance, let's say during negotiations your broker informs the landlord that you intend to relocate to an alternate site if you cannot achieve a satisfactory agreement. Then imagine that the landlord calls you to discuss the possible timing of your relocation, and you state your preference is to stay at your current site. You have just signaled that you are not truly serious about relocating, and thus weakened your broker's negotiating power with the landlord. Discuss with your broker in detail the objectives of your lease negotiation before it begins, and where you are, and are not, willing to compromise. This will help ensure you achieve the best possible outcome.
  5. Know where you want to relocate. In the event your lease negotiations do fail, be prepared to decide whether you want to stay in the same general area or move to a new destination altogether. There can be good reasons for both options - for example:
    • Stay close to preserve patient base. The key advantage to staying close to your existing location is that it's easier to maintain your patient base and the predictable cash flow it generates. To that end, it is ideal to relocate no further than three miles from your current location, and certainly no more than five miles away.
    • Move further to improve practice value. If the area where you currently practice has changed demographically or economically over the years and no longer supports your practice or insurance model, then it may make sense to move farther outside your current area. But remember that if you relocate beyond a five-mile radius, you will probably need to undertake a professional marketing effort to rebuild some percentage of your patient base.

Also, be aware of the amount of time you will need to fully relocate your practice. Below is a general timeline for an average size practice:

How much time do you need to relocate?

  • 3-5 Months: Identify new location | Negotiate and sign a lease | Conduct space planning
  • 4-5 Months: Buildout office space
  • 1-2 Months: Hire staff, notify patients, occupy space

The bottom line is to plan well in advance so that you can secure your lease and avoid practice disruption from a failed negotiation:

  • Don't assume your landlord wants to maintain your current arrangement.
  • Start discussions with your landlord well before your lease is due to expire to ensure you can make alternate arrangements if necessary.
  • Use a knowledgeable broker who can negotiate for you.
  • Make sure you and your broker are strategically aligned.
  • Identify a potential alternate location should you need to relocate.

By taking these steps, you can help secure your lease and enjoy the continuity of your practice for years to come.

About the Author

Austin has guided hundreds of dental, optical, veterinary, and related medical professionals through the process of opening successful practices. For over 13 years, Austin has helped his clients identify their most ideal locations, negotiated to get the best terms and conditions for their space, and represented medical tenants with lease negotiations, land acquisitions, and building acquisitions. In addition to his real estate experience, Austin has helped start up and manage two successful dental practices in the Dallas/Fort Worth area, providing first-hand insight into the process his clients are working through. Austin has guest lectured numerous times at the Texas Dental Association and Baylor College of Dentistry on the process of finding the best location when starting a practice. In his freetime, Austin enjoys spending time with his 4 year old daughter Lillian; wife, Lauren; and springer spaniel, Dixie. Contact Austin today at austin@practicerealestategroup.com

View all articles by Austin Wheeler


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Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

ADA® is a registered trademark of the American Dental Association. ADA Member Advantage is a service mark of the American Dental Association. ADA Member Advantage is a program brought to you by ADA Business Enterprises, Inc., a wholly owned subsidiary of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

All financing is subject to credit approval.

Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.

ADA® is a registered trademark of the American Dental Association. ADA Member Advantage is a service mark of the American Dental Association. ADA Member Advantage is a program brought to you by ADA Business Enterprises, Inc., a wholly owned subsidiary of the American Dental Association.

All financing is subject to credit approval.

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