HERE’S WHAT YOU NEED TO KNOW WHEN IT COMES TIME TO SELECT A NEW SPACE.
Existing eyecare professionals may ignore the symptoms of a problem office for years, but one day you have to face it. Your growth has flattened, the optical needs a facelift, and if you don’t do something, slow growth will turn into no growth and then fatal decline. Or perhaps you’ve been working for other practices for years and now it’s time to open your own.
The only way to know if you can afford a new office is to determine cost, and the easiest way to begin is to start talking to a few local commercial real estate brokers.
DO I NEED A BROKER?
Finding the right location is hard enough. Once you do it’s even tougher to negotiate the lease or purchase. Even if you stumble on a good location, you still need a broker. They are in the market and can research what the location is really worth. They can also negotiate the best terms and get concessions from the landlord that you might never think to ask for, such as more months of free rent, lower yearly rent increases, longer options or a smaller percentage cost for CAM (common area maintenance), for example.
The landlord or seller pays their commission, so you have nothing to lose and much to gain.
In a buyer’s market, incentives to woo desirable tenants and buyers may include free rent for several months, a lease or purchase price at below market rates, a generous build-out allowance, or possibly all three.
SIX TYPES OF LOCATIONS
You must first decide what type of location will be best from among six types.
1. PROFESSIONAL BUILDING
Professional buildings range from small commercial buildings housing three or four professionals, to large high-rise medical towers adjacent to a hospital.
If you have 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.
The best location in a professional building is a ground floor space off the main lobby, preferably with a window. If people coming into the building glimpse your optical, some of them will walk in and become your patient.
Many older practices are located in storefronts in the downtown commercial area of small towns and larger cities. Parking is often a problem. Unless your town or city is improving parking, you may be stuck with a practice whose growth is limited. A storefront does offer the possibility of walk-in traffic, but this depends on the particular location and even the particular block. Do your own informal count of pedestrian traffic on several different days and talk to neighboring businesses before deciding.
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 convenient for your patients, bring you added walk-ins and give you visibility as a member of the community.
3. NEIGHBORHOOD SHOPPING CENTER
Neighborhood shopping centers (also called strip centers) where the stores border the parking lot are fast becoming the location of choice for starting a practice because they offer good value. The walk-by traffic generated by anchor tenants can help a new practice.
The most ideal space in a strip center is next to a busy anchor tenant or in an “end cap” unit with more visibility to the street. Less desirable is an inside corner.
4. REGIONAL MALL
Leasing space in a large regional mall is neither for the fainthearted nor the financially insecure. It is the most risky place for a start-up and not recommended. Excellent foot traffic can give you a high rate of return, but rent will be high (likely based on a percentage of your gross sales), and it will cost more to construct because you must build your own storefront and interior.
To be successful in a mall, you must have deep pockets, business acumen, experience in mall locations, 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 could be one of your best investments.
Starting a new practice in this kind of location is more risky and takes more start-up capital than most new practices can muster. As with a professional building location, a good marketing plan must be implemented since you can’t count on walk-ins.
A design that reflects the character of your practice is effective 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 can 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 own your office space. Office condominiums are just like residential condominiums but exclusively for businesses.
Office condos often include a building allowance; the cost of your interior improvements is wrapped into the price of the condo unit. However, be prepared for the improvements to cost more than the allowance.
You will have an owner’s association to which you will pay dues to cover maintenance, but a manager handles maintenance for the entire complex, so an office condo can be a great way to build equity without maintaining a whole building and grounds yourself.
HOW MUCH SPACE?
If you’ve been in practice for a while, you may have a good idea of how much more space you want. This will be tempered by 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% to 20% increase is about average. Many practices do even better than that.
WHAT SHAPE IS BEST?
The closer the shape of the space is to a perfect square, the more efficient your floor plan can be, especially for offices 3,000 square feet or larger. A rectangular shape can be quite efficient also, if it is not extremely narrow. The minimum width of even a small 1,500-square-foot office is 20 feet across and no smaller. Spaces that are 15 feet wide or less will be uncomfortable and crowded. A space 15 feet to 20 feet wide is “iffy” and should not be considered unless there is truly no better choice available.
If you are a solo practitioner and this is your first office, 1,400 to 1,600 square feet with two exam rooms will likely be an ideal size for you. Go smaller than that and you can end up with an optical that is too limited to produce sufficient frame sales. If yours is a mature, established practice with partners or associates you may need 3,000 square feet or more. Larger practices with three or four full-time ODs and 10 or more employees may need 5,000 to 6,000 square feet or even more.
Odd shaped spaces (for example, an L-shape), or narrow spaces under 20 feet across, make it difficult to achieve smooth patient flow and high efficiency in the floor plan design. When the location of such a space is far superior to any other choice, you may decide to go with it, but if at all possible, increase the square footage by 20% or more. That gives the designer or architect some “wiggle-room” and a greater probability of designing an efficient plan.
An experienced and imaginative optometric designer can find creative ways to employ unusual wall angles or other unusual features that make your office stand out from the typical box-like shape of most spaces.
You’ve probably heard 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 mission. It can take months or even years to find the right space depending on the market and 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 L. Wright, CID, prominent eyecare interior design specialist, heads one of North America’s most award-winning and successful optical design firms. A Certified Interior Designer, she has worked with over 1,000 top eyecare professionals since 1984. BarbaraWrightDesign.com