Finding a Location for Your Practice: Essential Considerations

By Patrick Valentz; Principal, Xite Healthcare Real Estate

An audio version of this article is available at the bottom of the page.

Opening day of a new practice marks the culmination of years of training and preparation. But before a practice can open, a decision on where to build it must be made. The importance of having a strategic location cannot be overstated—never has location been more critical to a practice’s success and longevity. And finding one requires much preparation as well. Carefully consider the following as you search for the best location for your practice.

Timeline

By the time you see crew at a construction site in a desirable commercial location, a lease on that space has probably already been negotiated. This is why a proactive and aggressive approach is so important to securing the location you want. Ideally, a dentist planning to open a practice should begin the process of locating a property a year or more in advance. A 12-month timeframe allows for the completion of necessary planning and paperwork, as well as construction and customization of the new facility.

Practice Goals

This is most important. What are your long-term goals and objectives for your practice? When you sign a 10-year lease on a dental office property, you make what amounts to a 20-year commitment. This is one of the many reasons that it is so critical to ask questions like, “Where do I see my practice in five years? Ten? Do I plan to add an associate eventually? Will this space be sufficient as my practice expands?” You may need three operatories now, but limiting yourself to a property that only accommodates three may prove an unwise decision in five years. Avoid choosing a location that will inhibit your practice’s growth.

Also, determine what demographic segments you want to serve. Knowing answers like these is critical to determining the size of your space and your intended client base.

Residents and Nearby Businesses

It’s important to take a data-driven approach to selecting an area for your new practice or relocation of a practice.

Demographics

Review the area’s demographics. Do they support your practice goals? For example: What’s the average household income? The median age, and medical-insured versus Medicaid population? Can the population density support your goals for practice growth? Is the area near up-and-coming neighborhoods experiencing population growth? Are new schools and shopping centers under construction? Is a hospital nearby? These will affect the population—and your client base now and in the future.

Competition

Also, have a commercial real-estate firm conduct a thorough competition analysis of the selected area to ensure it’s not oversaturated with competitors. While the presence of other dentists in the area should not necessarily deter you, it’s worthy of substantial consideration. Your practice type—and whether or not it serves a niche market–will help determine if a nearby competitor might adversely affect your business.

Shared Property

If you choose to open your practice in a mixed-used or retail development, keep in mind that the other businesses that inhabit the building may negatively or positively affect your ability to attract and maintain patients. Many dentists are selecting locations in multi-unit properties that have other tenants that complement their services. These locations might be close to a competitor, but highly visible or on a major thoroughfare to growing areas.

You may benefit from speaking to your real estate consultant regarding the demographics of the area, and together determining if potential patients would be attracted to—or deterred by—nearby businesses.

Visibility, Accessibility

Make sure the space you will occupy has visibility to drive-by traffic and good sign opportunities on the building—and any monument or pylon sign, if available. Natural and man-made barriers make it difficult for people to see your practice. Also, inconvenient U-turns and traffic-laden intersections typically are deterrents to potential patients, who may seek more accessible offices. Given the choice between a practice near a peaceful access road and an office located across a major freeway, research and common sense indicate that most people would opt for the path of least resistance.

Price vs. Value

Too many dentists limit their focus to the price per square foot when leasing a new property, viewing it as a consideration that supersedes all others—including the value of the location. A decision to settle for a less desirable property could lead to the downfall of a practice. Be sure your final choice is not a compromise based solely on the initial financial investment, but one that takes into account the future of your practice. When dentists settle for less expensive real estate, they often find themselves spending the real-estate savings on more marketing to make up for lack of visibility, appeal, or loss of business due to a new competitor that leases in a superior location.

Final Tips

After you’ve chosen a location, it’s important to negotiate the following up front: rental rate, tenant improvement allowance, operating expenses, time to complete interior construction, landlord and tenant responsibilities, and signage.

Even some of the most skilled and knowledgeable practitioners ultimately fail due to poor planning. Invest a substantial amount of time researching and speaking with dental-specific real estate professionals, contractors, designers, and equipment specialists. These organizations specialize in developing dental practices from the ground up, and serve as advisors throughout the process of building your practice. A dental real estate professional with a comprehensive knowledge of the Texas dentistry market will help you implement a data-driven plan with a 360º perspective of your practice’s needs that’s conducive to your success.

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