Is It Better to Own or Lease My Practice Real Estate?
By Bryce Very, CARR
This is one of the most common questions healthcare providers ask regarding their practice’s real estate. Many providers are quick to assume that since they own their home, they should also own their office space. While that logic is sound and often times owning is the top option by far, there are scenarios where owning your office space may not be in your best interest. The simple answer to the question, “Is it better to own or lease?” is – It depends. Unfortunately, there is no easy, one-size-fits-all answer on ownership vs leasing. Instead, there are many factors that come into play and need to be fully vetted when contemplating this decision.
Analyzing considerations like the season of your practice and future growth needs, available financing, cash flow and your practice’s financial position, tax implications, and market availability, all play roles in determining whether to lease or purchase. The following considerations are important to evaluate and will help guide your decision on this topic.
• Flexibility: When you lease a property, you typically have more flexibility to relocate your office space as you will likely be signing a 5, 7 or 10-year term.
• Concessions: Another great benefit of leasing comes in the way of the concessions that landlords will offer blue chip tenants, like healthcare practices.
• Availability: If you are in a high-growth, dense urban or downtown area, there may be very few options to purchase. In most markets, lease options outweigh purchase options by 10 to 1, and in more populated markets, the disparity is even greater.
It’s easy to see how this may be the most common question regarding healthcare office space; however, it’s not a question that has a definitive answer for everyone. You need to dive into your situation and scenario deeper with the help of a good healthcare tenant Agent or Broker. There are many considerations and implications to consider and having all the information in a comparative analysis puts you in the driver’s seat to make the most beneficial decision for your practice.
Bryce Very is the local affiliate broker for CARR. CARR is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers and a gold sponsor of the Nashville Dental Society.