Building-vs-Leasing
Deciding whether to build or lease is one of the first decisions you will need to make for your practice. Both approaches have compelling benefits, and the right choice depends on your practice's specific lifecycle, financial goals, and local market
A Case for Building
Equity:
Building allows you to create equity in an asset. You can also create extra income by leasing out any extra square footage.
Custom Infrastructure:
Medical facilities require heavy mechanical, electrical, and plumbing (MEP) systems, such as central vacuum, compressed air, and imaging shielding. Building from the ground up or doing a custom build-out means your office is designed exactly to your specific needs.
Avoid Retal Risks:
You never have to worry about a landlord raising your rent beyond your budget or choosing not to renew your lease, which is a significant risk for specialized medical spaces.
A Case for Leasing
Flexibility:
If the local demand shifts or you outgrow your facility, it is much easier to relocate than to sell a commercial building.
Working Capital:
Leasing relieves you from the stress of buying land and finding funding for custom ground-up construction. This leaves you with more money in your pocket now to invest in marketing, hiring, and purchasing expensive new technologies for your practice.
Less Maintenance:
Landlords are responsible for making all of the general property maintenance and major repairs. This frees you up to focus entirely on patient care.
Factors to Consider:
Here are some additional factors to consider that may make the decision of which route is right for you clearer.
The 7-Year Rule:
Experts generally consider 7 years the "breakeven point". If you plan to remain in the exact same location for 7 to 10 years or more, purchasing or building typically provides a better return on investment than leasing. You never have to worry about a landlord raising your rent beyond your budget or choosing not to renew your lease, which is a significant risk for specialized dental spaces.
Build-Out Costs: Ground-up construction can range from $350 to well over $650 per square foot, plus land acquisition. Doing an interior build-out is usually significantly cheaper upfront, but requires a strong lease agreement and the landlord gets to keep the equity in the improvements made.
Whether you decide to build new or need improvements on an leased space, Monarch Build is ready to be your trusted partner!