When doing a site selection for a chiropractic practice, you should not be looking for the cheapest location you can find.
Instead, you should be searching for a location that will enable you to maximize your patient volume. Leasing a weak or mediocre location will negatively impact the income potential of your practice.
If your lease is coming up for renewal and your practice is underperforming, you need to consider relocating. If a practice is doing $300,000 in annual revenues but could be doing $400,000 or more in a better location, the problem is not going to correct itself.
If other chiropractors (or even other healthcare providers such as physio-therapists or acupuncturists) are beginning to move in around you, and also leasing newer or better plazas nearby your office, it will make your location less desirable. A poor location will hold back the growth of your practice, make it more difficult to earn a good salary, and reduce the resale value of the property.
Selection of the fittest
Site selection is an important issue. Accordingly, plan on investing some time searching for the right location. Consider neighborhood, traffic flow, visibility (by both drive-by and pedestrian traffic), demographics, signage, and parking. It is better to have negotiated a poor lease deal on the right location than a good deal on a bad one. Many chiropractors about to open their first office typically do not allow enough time for a thorough site selection process.
If you are opening a new office or moving, begin searching for your ideal site at least 9 to 12 months before you plan to open. If you are already a tenant, initiate your lease renewal negotiations a minimum of 12 months before the lease expires. After all, if you can’t get a decent renewal, you will want time to negotiate a new lease and relocate without the pressures that every tenant feels at that time.
Kicking the tires
In viewing properties, avoid assuming that all the current tenants will remain— especially the anchors or major stores.
We remember a number of tenants in a local strip mall who were caught completely off guard when an anchor grocery store moved out of the property. None of the business owners who had recently renewed their lease thought to ask if the grocery store was staying.
While this national tenant continues to pay their rent on the vacant space, the landlord cannot put another grocery store into the 25,000-square-foot anchor spot because the tenant has a non-compete clause in the lease agreement.
The landlord continues to receive the rent payments from the grocery store, but traffic to the strip mall has dropped by 50 percent and the remaining tenants are suffering the consequences. Brokers and in-house leasing representatives typically are required to know this type of information but may not tell you unless you ask.
Another common mistake is letting one broker or agent assist you with viewing a variety of properties. Do talk to the listing agent or broker and ask questions. But do not let an outside agent introduce you to another building that is not listed by his or her brokerage.
Speak directly to the listing broker for each building in which you are interested or, in other words, whoever has their name on the “For Lease” sign outside of the building. This will result in your obtaining more accurate information faster and will avoid commission-splitting. This is where two brokers share the commission paid to them by the landlord for acquiring your tenancy, which could result in an inflated rental rate and reduce your chance of leasing there if the listing agent has his or her own prospects for the space.
In some cases, the broker will present you with an offer to lease or letter of intent that states the broker is working in a dual-agency capacity. You can cross this point off the offer and make your desires known to the broker. It is absolutely critical to realize that conventional commercial agents work for the landlord who is paying their commission, and not for you, the tenant.
They are paid by the landlord to get the best deal for the landlord. Even if there are two agents involved, if they are both sharing the same commission, are they really working for you—the chiropractic tenant?
Dale Willerton (left) and Jeff Grandfield (right) are The Lease Coach, commercial lease consultants. They are speakers and the co-authors of Negotiating Commercial Leases and Renewals for Dummies. For a copy of their free CD, “Leasing Do’s & Don’ts for Chiro Tenants,” email email@example.com. You can also contact them through theleasecoach.com.