If your lease is coming to an end and you’re debating whether to renew or buy, you’re asking the wrong question.
A better question is: Is your business healthy?
A lot of times dentists will get toward the end of their ten-year lease and wish they would have bought medical office space, rather than leased one. They get a little case of FOMO after seeing friends who invested in commercial real estate and did “well” or seeing another friend from dentistry school who began a business started a practice, bought their space, and seemed to be doing well, too.
The truth is unless you have seen their P&Ls, you don’t know how they’re doing, AND investing in real estate can happen outside of your practice, and sometimes, it’s better that way.
There are two explanations for this.
Your location being successful doesn’t depend on whether the space is leased or purchased.
Our clients in highly visible retail locations are in lease-only spaces. And the fact that they have these areas is a big reason for their success. But the very nature of that success – the office is in a grocery-anchored shopping center, for example – means that they won’t be able to buy it.
These areas are also extremely competitive, so if they went to look around, there might be medical office space for sale on the market, but moving the practice would compromise the location that’s working so well right now.
When it comes to renewing your practice, prioritize the health of your business over your ambition to invest in real estate (by the way, we can help with that, too).
Your healthy patient base doesn’t depend on whether the space is leased or purchased.
If you decide to relocate your office after a renewal, you’re not only jeopardizing your location, but you’re also compromising your patient’s convenience. Because your current success is based on the patients who pick you (and from whom you make so much more money), I would advise you to weigh the value of your patient base against the value of your real estate.
Insisting that you want to buy the real estate that houses your practice can cloud your perspective on what’s best for your business.
In conclusion, when it comes to renewal, I’d advise you to consider the following:
- Are you successful in your location?
- Is the majority of your patient base local?
And when you’re ready, I can assist you with commercial property investments.