The Dental Office Lease: Often Better than a Mortgage

This week I learned that 60% of dentists responding to my survey own their dental practice facilities, and 40% lease.

Frankly, I’m surprised more dentists don’t lease. Owning your practice’s building can get complicated.

Here are some links you may find interesting:

• Check out the full dental real estate survey results
• Economic Downturn? Renegotiate Your Dental Lease! by Jim Du Molin
• Most Dentists Forget the Risk Costs When Leasing Office Space by lease negotiator Lewis Gelmon
• Dental Dilemmas in Real Estate by Lewis Gelmon
• Dentists Don’t Sell Their Practices, They Sell Their Leases… by Lewis Gelmon

Here’s my take: I’m not personally a fan of buying and owning your building because it’s an added complication to liquidation upon sale or transfer of your practice. Plus, there can be all sorts of contingent problems.

It’s been easy for dentists to buy commercial real estate. Historically, they’ve been qualified for loans almost automatically because dentistry is such a stable business. You sort of need to be a real screw-up to fail in dentistry, and banks know this.

With commercial real estate tanking, however, the issue for all dentists today is: Are you located in or near a commercial real estate center that may now be in trouble?

Empty storefronts mean reduced property values, and fewer employed people passing through the area to use your services. (The upside is that it is a great time to renegotiate your lease!)

Owning has worked out great for some dentists, but one of the major dangers of owning is that neighborhoods can go downhill. What if they start selling crack cocaine right in front of your office, and you don’t have an economically viable way to move?

Of course, the major danger of leasing is getting taken advantage of by your landlord. So many dentists don’t call the dental lease negotiator until after they’ve signed the paper…

My recommendation, when leasing a new facility, is to NOT contact the landlord personally. No matter how savvy you are about real estate, your potential landlord sees you as an easy mark. This is his or her full-time business, and he or she knows every trick in the book. Use a professional leasing negotiator to make the contact and determine if the property is right for you.

If you currently have a lease, start your negotiation at least TWO YEARS before it expires. The shorter the time line to the lease expiration date, the more money it will cost you.

There are several great lease negotiators out there. You want one with a proven track record in DENTAL OFFICE LEASING. I often recommend Lewis Gelmon… And no, I don’t get a referral fee.