A step back to the conception of the practice. Step one: secure financing and source of capital. Done. Step two: Find a suitable site to set up your practice. This step was actually much harder than I had anticipated. It’s not like you can just look at a map and throw a pin where you want to set up an office and you do it. There are usually three types of properties you can find. You can either find a piece of land and build your office on it, find an existing space and demo and build out, or find a new lease space and simply build out the interior. Obviously each option presents with its own set of challenges and advantages. Without getting too much into each, I went with the third option, to find a new unoccupied space.
Before deciding on a location, it’s important to determine what kind of practice you want to establish. You wouldn’t want to open an upscale practice in a low income area or the other way around. As for my vision, I am looking to have a modern office. Almost ultramodern. Ideally I’d want to have mainly fee for service patients with some PPO insurance. I don’t really agree with how dental services are being dictated, to a certain extent, by the insurance companies. So, high end, premium for quality of service and work with emphasis on technology augmented dentistry. In order to make this model work, I should be looking for an area where the demographics are skewed towards a more educated and higher income population.
To help me on my hunt for THE location, I enlisted the help of Phelps Commercial Realty. As I mentioned in my last post, they deal only with dentists and health professionals so they know what to look for and where to look. After a bit of searching we basically found several locations that seemed very promising. The first location was off I-10 and Westgreen in Katy, Tx (west of Houston). The proposed retail center had just broken ground and would be ready for delivery mid-2015. The Katy area has seen very rapid growth recently and with relatively moderate to low dentist saturation in the area it seemed a solid location. Proposed location #2 was at the corner of Westheimer and Hwy 6 on the West side of Houston. I was not a huge fan of this retail spot. The location was good but access to the center would be a nightmare for anyone travelling on the far sides of either street. Also the general dentist saturation within a 1 block radius was stupidly high. I think there were something close to about 10 dental offices within less than 1000ft. Location #3 was off I-10 and Campbell, near Memorial City Mall. This location was to be on the ground floor of one of the new corporate towers off the highway. Like the other two locations this was set to be delivered spring-summer of 2015. The demographics of the area around this location were very unique. On one of the mail routes very close to the office location, the median household income was close to $300k with a high turnover rate. The 1-mile radius median income was something like $135k with a decent growth rate and high household turnover. The main downside was another stupidly oversaturated area. The last location which became available at the 11th hour turned out to be the current proposed site on Memorial in between Hwy 6 and Eldridge. Right in the heart of the energy corridor. 1/5-mile Mean income of $112/96k isn’t super impressive but the big key factors were the large corporate offices being constructed across, and down the street. With BP constructing their massive multi-tower downstream headquarters across the street and Sweedish based Skanska Construction building their corporate HQ next door the ability to pull from both residential and commercial demographics puts the office in a prime location.
So I decided on a location. Great. Now what? A bunch of back and forth negotiations with the landlord. I want this, they dont want to give me that, lets address this, how about that? In the end, I think I got pretty good terms on the lease. $30-35/sqft/yr with a $35/sqft improvement allowance. The only problem I had with the location was the timeline. Unlike the other properties, this one was done and ready to be delivered on signing the lease. This was a huge problem as I had no design or construction plans. Here I was planning on starting build-out construction early-mid 2015 and now I need to build out ASAP. Some scrambling to find a designer, architect, contractor and equipment supplier and some tactful filibustering and negotiations later and I was able to secure 5 months of abated rent (free rent until March).
And with that, a 10 yr ~$800k lease was signed to secure a ~2000sqft space in the heart of the energy corridor.
10 Year $800k lease space secured
~2000sqft (60 feet window front) shell condition with no previous construction
On Memorial Dr in the middle of Energy Corridor with BP and Skanska Corporate Offices across the street and next door.