Five Tips to Sign a Successful Dental Real Estate Lease

Your real estate can significantly affect your dental practice. You want to find a space in a prime location with necessary amenities to keep your business flourishing. Before you sign a dental lease, here are five tips to ensure a favorable outcome:

1. Hire a real estate broker

Brokers are there to represent you and your best interests throughout the deal. They will help you search for properties, draft a letter of intent and negotiate lease terms. You’ll want to hire brokers who have significant experience in dental real estate, as they will better understand current market trends. Menlo Group has several advisors who specialize in dental real estate and can help you negotiate a lease that will best meet your needs.

2. Calculate the percentage of production your rent will consume

According to the American Dental Association, the national average rent consumption for dental practices is between six and seven percent. In dental real estate, your rent should never be more than eight or nine percent of your yearly production (the total amount of money your business generates).  As you search for a property and negotiate lease terms, make sure you don’t end up paying too much.

3. Use the right name on your dental lease

Instead of using your personal name on the lease, consider using the name of your entity. Risk levels and liability are lower when you use the name of your entity. Make sure your broker is aware of your desire to use your entity name as you discuss terms in the letter of intent and in the final lease documents.

4. Understand all lease costs

Your base rent may not include all of your costs you’ll be liable for. Look out for utility expenses, parking fees, taxes, security fees, common area maintenance fees and insurance costs. If you have any questions about additional costs you may incur, consult your commercial real estate broker or check out this blog post.

5. Ask for exclusive rights

You may end up with unfair competition if your landlord allows another dental practice or similar businesses to set up shop nearby. Play it safe by negotiating for exclusive rights to prevent competing practices from leasing space in the same building or complex where your business is located.

As you implement these tips, you will be able to sign a lease that works in your favor. For more information, learn more about our dental services or connect with one of our dental real estate experts.