When you're looking for your first dental office space, you've got to tread carefully, because there are many pitfalls on the way. Just succumbing to one of these could cost you thousands of dollars.
There are unscrupulous landlords out there, mind-numbing legalese, and other landmines that can blow up in the face of even the savviest of medical professionals. If you read this article, you'll reduce your chances of being victimized.
So, here are the eight mistakes dentists make when they look for their first office space:
1. Agreeing to a Personal Guarantee
If you can avoid it, don't agree to a personal guarantee. By doing so, you'll be on the hook for the full amount of rent for the term you originally agreed to if you default on your lease.
Some landlords make the argument that because dental offices require improvements that are costlier than other commercial spaces, a personal guarantee is a "must." However, your landlord is probably charging you more rent because of this higher cost.
If you cannot get out of having a personal guarantee and he's charging you more rent, try to negotiate for a lower amount. You can also ask for a shorter amount of time the personal guarantee will be in effect or a limitation in how much you'll have to pay.
2. Underestimating Tenant Improvement Costs
When you move into your beautiful new office space, you're probably going to have to do some renovations. These can range from a few coats of paint to a complete, top-to-bottom build-out of an empty shell.
Don't make the mistake of underestimating the costs of tenant improvements. If you do, you might end up running out of money, which could put a damper on the excitement you feel for your project.
Hire a qualified project manager, contractor, or architect to estimate these costs for you. A tenant rep can use his impressive network of professionals to help you find the best person for the job. Once you have an estimate, stick to your budget, so you don't get in over your head.
An unethical agent can cause you to underestimate your costs by only giving you the raw construction estimate for your build-out. That's because he's chomping at the bit for you to sign your lease.
He might have gotten an estimate from a contractor. However, he conveniently left out things like design, permitting, and consulting fees, which gives you an inaccurate overview of what renovations will cost.
If you need an ethical agent, you can find one here.
3. Underestimating Build-Out Time
Don't underestimate the amount of time your build-out will take. Allow more time than you think you'll need. A rough estimate is six months, but complicated projects will take a lot longer.
Everyone needs to know what the construction timeline is. So agree to a construction schedule as early on in the process as possible.
To clarify expectations, make sure a floor plan and a finish schedule are attached as an exhibit to your lease. An exhibit is an item that's difficult to add to the main body of the lease text, so it's attached as an addendum. These two documents keep everyone on the same page by specifying what kind of carpet, wall coverings, and other features your completed office will have.
If your landlord is overseeing construction, let him know how much time you'll need to turn your space into a functioning office. This way, he can coordinate your move-in timeline with the construction timeline. Then, you won't incur any legal penalties by not vacating your old office space when you were supposed to.