Leasing your first office

Assume you have your practice-loan funding almost in hand and are ready to start looking for an office to lease. What do you look for? How do you know when you’ve found the perfect office?

You will probably work with a commercial real estate agent, who will show you property to lease. Your first decision will most likely concern the type of building. Consider the trade-off between visibility, which means higher rent, and advertising.

If you have more visibility and higher rent, you should not have to pay as much for advertising.

CONSIDERATIONS

When you find a likely location and talk with the property owner or property manager, here are some considerations and questions:

• Space needed. How much space will you need? Most chiropractic offices use between 1,000 square feet and 1,500 square feet, but this depends on your practice type and the activities you will be performing (including massage therapy, rehabilitation, etc.).

• Terms. How long is the lease term? The property owner usually wants you to commit to a longer-term lease. If you are willing to do this, you should receive concessions in the form of free months of rent or help paying for build-out.

• X-ray machines. Will you be using x-ray equipment? Is 200-volt electric available for the unit? Can you add lead lining to the walls? Will you be able to shoot toward an outside wall?

• Signs. What are the restrictions on size and placement of signs? What does the property manager require? What are the local signage restrictions?

• Parking. Is parking adequate? Are parking places for staff available? Is sufficient handicap parking available?

• Visibility. Is the office visible from the road? Are walkways and buildings adequately lit at night?

• Restrictions. Does the lease restrict your access to the building on evenings and weekends?

• Security. Is a security service/security alarm provided? Can you install your own system?

• Breaking the lease. What are the penalties if you break the lease before the end of the term? Can you renegotiate at any time during the lease?

• Subletting. Can you sublet to another chiropractor? To a massage therapist? Does the property have restrictions on the number of doctors who can practice with you?

• Security deposit. What is the security deposit? Is there one?

• Expansion. Can you expand, either by purchasing an additional unit or by building out?

• Neighbors. Are neighboring tenants compatible with your practice? Do you want to prevent other chiropractors from leasing in this building?

• Compliance. Are the office and parking areas ADA compliant? Are offices HIPAA compliant?

• Type of lease. The most important consideration is the type of lease. The type depends on who pays what. In a gross lease, the property owner pays utilities, repairs, insurance, and (sometimes) property taxes. In a triple net lease, the tenant (you) pays the taxes, insurance, and maintenance.

DON’T FORGET MAINTENANCE

Don’t forget the cost of common area maintenance. These costs in real estate taxes, utilities, and maintenance can increase your total lease costs substantially — up to $5 a square foot.

Here are other costs to consider. Be sure to ask who will pay these:

• Real estate taxes;
• Snow removal;
• Driveway, sidewalk, and parking lot repairs and maintenance;
• Assessments;
• Electricity, gas, and heat;
• Refuse collection;
• Water charges;
• Janitorial services;
• Sewer charges;
• Property, casualty, and liability insurance;
• Structural and roof repairs and replacements;
• Landscape maintenance;
• Nonstructural repairs, maintenance, or replacements; and
• Mechanical systems repairs, maintenance, and replacements.

Before you sign, make sure you understand your costs. This is the cost per square foot multiplied by the square footage to get an annual lease cost.

Let’s say costs are $18 a square foot, and your office is 1,000 square feet. Your annual cost in this case would be $18,000. Just divide that by 12 to get the monthly cost: $1,500 a month.

Finally, before you sign any lease, ask an attorney to review it to be sure all terms and conditions are included and stated clearly in writing. You must have your license to practice in hand before you commit yourself to making lease payments, or sign a lease with a contingency.

For more advice on setting up your practice, go to the Practice Startup section of studentDC.com.