If you’ve been researching dental real estate for any period, you know the market has boomed in recent years. However, as interest rates continue to rise, there is a buzz about the market slowing down. Clients who were set on searching for a dental clinic for lease this year are now wondering, Should I open? Is now the right time?
While some are concerned about a cooling market, our data suggests something different: the dental real estate market is shifting, not slowing down.
What We’re Seeing in Today’s Dental Real Estate Market
“We could see a slowdown in development and construction of new products. This means there are not going to be huge vacancies in the market,” explains Thomas Allen, dental real estate expert and CEO of Practice Real Estate Group. “There will most likely be a point in time where development will still be going on but slowing down. Other non-healthcare users will quit leasing space. That’s going to be the window for people to take advantage.”
This shift presents strategic opportunities for dental practice owners. “I think this could be a little downturn in the market that you can take advantage of. People are going to be needing cash to support other things, and they might be willing to make deals,” Thomas notes.
Three Data-Driven Strategies for Today’s Market
If you’ve consulted with your financial advisor and are ready to explore dental real estate opportunities, consider these three approaches:
1. Evaluate Rising Rates Within Your Cash Flow Context
“Let’s just say a startup doctor is taking a loan out for $500,000–$600,000,” Thomas explains. “Previously, they were paying around 4% on their money. Now let’s say it goes up 2% to 6%. Two percent on $600,000 is $12,000. That is literally $1,000 a month.”
The bottom line: “If you’re thinking about opening a practice, interest rate changes shouldn’t drive your decision because $1,000 a month is less than any employee costs.”
2. Consider Today’s Market in Historical Context
“The biggest downturn since the Great Depression is when I got into this business, and it was a frenzy how many doctors were starting up. Their practices were doing great,” Thomas reflects.
The key difference today: “Back then, the real estate market was way overbuilt. Right now the vacancies are so tight. There will be opportunities, but I don’t think it’s going to be quite as easy as 2008-2010 when leasing space for doctors was like shooting fish in a barrel.”
3. Develop a Comprehensive Business Strategy
Opening your own practice offers control, autonomy, and potentially significant income—but success requires more than just finding space.
“You really should sit down and create a real business plan,” Thomas advises. “It’s not just how much revenue you’re going to make. It’s what kind of practice are you going to be? How many people are you going to hire, and what are their hours? How are you going to market? What is your branding? You’re not just opening a clinic.”
Next Steps for Your Practice Location
As dental real estate experts who have helped hundreds of doctors secure locations annually, we have a consistent track record of client success.
“We’ve never had a client fail,” Thomas states. “That’s still true to this day. I’ve been in this business for 12 years, and I have never seen a client fail.”
If you’re navigating these decisions for your practice, our team specializes in helping healthcare professionals find and secure locations that drive business success. We understand the specific challenges of dental real estate in today’s shifting market.
Ready to Find Your Ideal Dental Practice Location?
Click here to schedule a meeting with our healthcare real estate experts today. Our team will analyze your specific practice needs, provide data-driven location options, and guide you through securing the best terms in this shifting market.
