 When the “got to have a new office” bug bites, you may find yourself in a dilemma. Your growth has flattened. You’re seeing the maximum number of patients possible. The optical needs a facelift. You have no room for more equipment or more staff. All the signs that point to a move are there, but you hesitate because you’re not sure you can afford a new office. The only way to know if it’s feasible is to find out how much that new office could cost. The way to start is to research possible locations.
In the current economic climate many landlords and developers are offering incentives to woo bargain-hunting tenants and buyers. You may be able to get free rent for several months, a lease or purchase price at below market prices, a generous build-out allowance, or possibly all three. It’s a buyer’s market. Those in a position to take advantage of it will reap long-term benefits.
Before you can begin to look for a new space you must decide what type of location will be best for your practice. Even if you eventually decide to stay put and remodel, you should investigate the availability and cost of new spaces or property in your area. That’s the only way you’ll know for sure if remodeling is a better choice for you.
No matter whether you are starting a new practice cold, opening your third satellite office, or building from the ground up, the process starts with looking at possible locations.
Six Types of Locations
There are six different types of locations, each with its own set of pros and cons to consider.
1. Professional Building
Professional buildings come in all shapes and sizes, from small commercial buildings housing three or four professionals (doctors, dentists, lawyers, accountants, etc.), to large high-rise medical towers located adjacent to a hospital. If a professional location is what you want, then locating in a medical building could be right for you. You may be able to get a building allowance from the landlord to defray some of your construction expenses. This type of location is well suited to most ophthalmologists but not every optometrist.
If you’ve already got an established practice in a medical building, relocating it into a larger space with a new modern optical will enable you to continue your growth. However, starting a new practice in this type of location requires referrals from other professionals and a good marketing plan to attract new patients from the neighboring area. You cannot depend on the walk-in traffic that commercial locations get, so you must be sure you can attract enough patients to your new practice before committing yourself to the lease.
If a professional building is your preference, the best location is a ground floor space off the main lobby, preferably with a window for visibility. If all the patients coming into the building get a glimpse of your optical, some of them will walk in and become your patient.
2. Storefront
Many older practices are located in storefronts in the downtown commercial area of small towns and larger cities. Often parking is a big problem in these locations. Unless your town or city is actively working to improve the parking situation, you may be stuck with a practice whose growth is limited. A storefront location does offer the possibility of walk-in patient traffic, but this depends very much on the particular location and even on the particular block. It’s wise to do your own informal survey count of pedestrian traffic on several different days and to talk to neighboring businesses before deciding on a storefront location for a new practice.
Some storefront locations have very little walk-by traffic and that, coupled with a lack of parking, can make the establishment of a profitable practice impossible. However, a good storefront location with easy parking can make your practice a convenient place for your patients to visit, bring you added walk-in patients, and give you visibility as a member of the community.
3. Shopping Center
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| A stylish new shopping center like this one could be a good location for a start-up practice. |
Neighborhood shopping centers (also called strip centers) where all the stores border the parking lot are fast becoming the location of choice for optometrists who are starting a new practice because they offer good value for your rental dollar. The walk-by traffic generated by anchor tenants such as large supermarkets and drug stores can help a new practice reach the break-even point and become a profitable operation sooner than a medical building location.
The most ideal space in a strip center is next to a busy anchor tenant or in an “end cap” unit, which has more visibility to the street. Less desirable is an inside corner because it is difficult for people to see your sign and to notice that your office is there.
Second-floor locations are also less desirable for a new practice because potential new patients are not likely to make the effort to walk up a flight of stairs unless they have another reason for going there. Established practices with a good-sized existing patient base have a much better chance at succeeding in a second-floor location. Elevator access for patients is required for any floor above ground level, so older buildings without elevators will not work.
4. Mall
Leasing space in a large regional mall is neither for the fainthearted nor the financially insecure. This type of center usually has excellent foot traffic, which can give you a high rate of return on your investment. But rent will be high (likely based on a percentage of your gross sales), and it will cost more to construct the office because you must build your own storefront as well as the interior.
To be successful in a mall location, you must have sufficient financial resources, business acumen, and a highly competitive spirit. The name of the game here is location. Negotiate hard for a space that has maximum visibility and foot traffic.
The mall landlord is likely to give little or nothing in the way of building allowances and will want you to get your space completed quickly to start collecting rent. But the design process can take longer because your designer or architect must get the plans approved by the tenant coordinator, who may be in another state halfway across the country. Even when the tenant coordinator is nearby, it might take two or three weeks to review your plans. So it’s especially important to negotiate for a long lead time before commencement of a regional mall lease.
5. Freestanding Building
Depending on the location and the design, a freestanding building can be totally professional, totally commercial, or a combination of the two. An established, growing practice fares well when relocating to larger quarters in a freestanding building. If you can afford it, buying or building your own building to house your practice could be one of the best investments you ever make.
Starting a new practice in this kind of location is more risky and takes more start-up capital than most new practices can muster. And, like a medical building location, a good marketing plan must be implemented since you can’t count on getting walk-in patients from neighboring businesses.
A building design that accurately reflects the values of your practice is an extremely effective form of silent advertising. A simple brick or stone exterior with well-groomed landscaping, good signage, and a large window that affords a glimpse into an appealing optical is sure to catch the eye of potential patients driving by.
6. Office Condominium
If building from the ground up is not for you, that doesn’t mean you can’t have ownership of your office space. More and more developers are building office condominiums, which are just like residential condominiums but exclusively for businesses.
Many times office condos come with a building allowance included. That means the cost of your interior improvements is wrapped into the price of the condo unit. Your improvements will cost more than the construction cost allowance given for a typical office condo, so expect some additional costs for construction.
You will have an owner’s association and will pay association dues to cover maintenance of the property, but a manager handles maintenance for the entire complex. An office condominium can be a great way to build real estate equity without the hassle of maintaining a whole building and grounds yourself.
How Much Space Do I Need?
If you’ve been in practice for a while, you may have a reasonably good idea of how much more space you want to have in your next office. Your need for more space will have to be tempered by the financial consideration of how much more space you can realistically afford. You can and should expect your eyewear sales to increase when you have a larger and more appealing optical—a 15% increase is about average. Many practices do even better than that.
If you are a solo practitioner and this is your first office, 1,200 to 1,500 sq. ft. will most likely be an ideal size for you. If yours is a mature, established practice with several partners or associates you may need 3,000 sq. ft. or more. Larger practices with three or four full-time OD’s and 10 or more employees may need 5,000 to 6,000 sq. ft.
Site Evaluation
You’ve probably heard somewhere before that the three most important things about any piece of real estate are location, location, location. Whether we’re talking about a space to lease or land upon which to build, I would add visibility as the next factor on that list.
Finding the very best location with the most visibility at a price that makes sense financially is your task. It can take months or even years to find the right space depending on the market and the economic conditions in your community. The factors of good location and good visibility are the most important whether you lease a space, buy an existing building or build a new building.
Barbara Wright, CID, author of Optometric Office Design Process & Pitfalls, is an award-winning certified interior designer with more than 25 years of experience in optometric office design. The president of Barbara Wright Design, she has designed more than 600 eyecare practices. Contact feedback@visioncareventure.com with comments and/or suggestions for future topics.
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