HOW TO SUCCEED IN A
DENTAL LEASE NEGOTIATION
It can take nearly a decade of higher education and, of course, a great financial investment to becoming a dental practice owner. So when it’s time to negotiate a new dental office lease, renegotiate a renewal or purchase new real estate—whether you’re launching your first dental office or moving locations—there’s more at stake than simply price per square foot.
At CARR, we work exclusively on healthcare professionals’ behalf to secure the best possible terms, which includes analyzing additional property locations for your dental office, site selection, demographic and competition analysis, purchase versus lease evaluations, timeline management and more. With this experience, we’ve seen some negotiating successes—and a number of costly practice owner mistakes.
For instance, simply accepting an existing dental lease’s terms at face value during a renewal is never smart—as there is always room for negotiation. And that’s money saved that can be invested back into your dental practice. (Even a $1 per square foot reduction in rent can equate to a savings of up to tens to hundreds of thousands of dollars over a dentist’s lease term.)
5 Tips for Negotiating a Dental Lease
Because we specialize in dental real estate, our skilled negotiators are able to deliver the most favorable terms possible, including dental office concessions specific to general and dental specialists. We consider every nuance from the ergonomics of the sterilizations areas and consultation rooms to demographics, neighboring tenants and more when searching for space. We fully understanding market rates, incentives, standard concessions and terms before we head to the negotiating table. We understand that going up against an experienced agent or landlord who negotiates for a living can be intimidating! But with the right mindset, representation, and these tips, you’ll come out successful.
Make Sure You Cover the Basics
Don’t be afraid to have your agent ask hard questions. How does the landlord treat tenant requests or issues? What do other tenants have to say about the building and upkeep? What is the tenant liable for in the property? What exactly is included in the lease agreement? At any point, you can take the time you need with your agent to be sure you understand all aspects of the lease agreement, and the transaction. You need someone in your corner helping educate you in this process, as you should never sign something that you don’t understand.
Do Your Homework Before You Negotiate
Coming prepared is the name of the game. When an agent is asking the right questions, that gives you an edge in dental lease negotiations. Engage the services of an expert dental real estate agent who can arm you with this data (what are other tenants paying? what concessions are standard? what are the benefits and risks?, etc.), saving you dozens of hours of your valuable time. The more informed you are on dental office options, the more difficult it is for profit-focused landlord to take advantage of you.
Begin the Research Process Months in Advance (If Possible)
The sooner you can start informing yourself, the better. One of the most common statements we get from clients is, “I thought I was starting this process early, but now I hope I have enough time to get it all done!” Understanding the importance of timing and dates and deadlines in a renewal or relocation is vital. This will give you and your agent time to do the appropriate due diligence when it comes to tasks like completing market research, assembling the right team of advisors and even ensuring the space you are looking at will work for your office requirements. Starting the process early also ensures you have the best posture in the negotiation, with timing on your side.
Ask Good Questions About the Landlord
Cover the basic questions in your dental lease negotiation, but don’t stop there. Starting with solid market intel will help you achieve the most favorable terms in the negotiation. Coming to the landlord with information on lease comps, dental office construction costs, and permitting and construction timelines will allow you to leverage data and information in the negotiation. This will get you further in identifying the deal points that are most important to stick to vs those that are less vital.
The Option to Buy
Remember, you are not obligated to take any quote or terms, even if the landlord says it’s the best he or she can do. The first offer is rarely the best, so keep your head in the game. The higher your level of confidence in your negotiation power, the better you’ll be able to strike a deal with the best possible terms available.
Another tip: It’s in the landlord’s best interest for you to continue your lease; he or she loses money when the space is vacant. So, you might have more negotiating power when you consider all of your options, including those to relocate or even purchase. You hold the cards.
Try These Additional Dental Lease Tips:
Discuss Right of First Refusal
Owning the real estate of your dental office gives you a major edge when selling your practice down the road. A right of first refusal gives you the first chance at buying the building, should the current landlord ever decide to sell. Make sure to consider this when negotiating your dental office lease.
Ask About Proper Signage
For your dental practice to be successful, patients have to be able to find it. Make sure you pay attention to what type of signage is available at the properties you are considering, and that any signage you negotiate for is properly documented in your lease agreement.
Ask for a Personal Guarantee Burn-Off
If your landlord requires a personal guarantee, it’s worth discussing with your agent to understand if a reduced guarantee is possible, or if the guarantee can ‘burn off’ over the duration of the dental lease term.
Recognize Different types of Leases: FSG, NNN
It is important for a dental tenant to understand the different types of lease structures being offered, as each lease type has differing liabilities, costs, annual adjustments, and other obligations. These are the most common lease structures:
A Triple Net Lease (or NNN Lease) is one of the most common structures in dental real estate. In addition to the dental tenant’s base rent, a Triple Net Lease contains a provision for the dental tenant to pay certain costs associated with operating the property. Those costs are the three Nets: property taxes, property insurance and operating expenses, including repairs and maintenance, trash removal, snow removal, landscaping, parking lot maintenance, property management, etc.
Another popular dental lease is a Full-Service Lease, which is one all-inclusive rental rate that includes both the base lease rate and the operating expenses (property taxes, insurance and common area maintenance) combined into one price per square foot figure.
When Negotiating, Be Diligent and Bold
When it comes to dental lease negotiations, the more prepared you can come to the table, the better your outcome will be. Take time to understand going rates, incentives, and terms—and work with an expert who can coach you in these areas.
At CARR, our seasoned experts have the commercial real estate experience to help you effectively negotiate your dental office lease and feel confident going into your lease negotiations.
In fact, our dental real estate brokers specialize in helping dentists and dental specialists achieve the most favorable terms in their lease and purchase negotiations. Our agents are committed to helping you avoid costly pitfalls, complications, and roadblocks—all while sitting on the same side of the table as you throughout the entire process. We’ll walk beside you from start to finish to help you gain the most favorable terms possible for your dental practice.
Contact us today to learn how we can act as your exclusive advocate to secure you the most optimal terms and outcomes for your dental real estate needs. We are the nation’s leading experts in this space and are honored to act as a resource for you!
TESTIMONIALS
WHAT OUR CLIENTS SAY
CARR listened to my needs and connected me with the right partners. They will work very hard for you!
Buhn Sohn, DDS
C.S. Family Dental
TESTIMONIALS
WHAT OUR CLIENTS SAY
Moving a dental practice is a big ordeal, but CARR’s professionalism and work ethic made it very easy and rewarding.
Lisa Carlson-Marks, DDS
Children’s Dentistry of Cherry Creek and Aurora
TESTIMONIALS
WHAT OUR CLIENTS SAY
CARR knew the exact steps to take to get the lease rate I was seeking.
Jared Bruggeman, DDS
Forest Hills Dental Care
TESTIMONIALS
WHAT OUR CLIENTS SAY
CARR helped me find and negotiate terms for both of my offices. First class company and experience!
Brad Dawson, DMD
Dawson Orthopedic
TESTIMONIALS
WHAT OUR CLIENTS SAY
Thank you CARR for your care, diligence and honesty. We are very happy we worked with you!
Amir Mahoozi, DMD
O’Trafford Dental Specialists