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    How to time your next dental real estate transaction

    Set yourself up for success by understanding how long different transactions may take.

    Every commercial real estate transaction has an ideal time frame to begin the process. Most health care professionals understand that starting a new office or relocating an office doesn’t happen overnight, but the majority of professionals are not aware of the ideal time frames for each type of transaction. Different types of problems arise when starting a transaction too early or too late, and both need to be avoided.

    Too early

    If you start the process too early, it creates a scenario where you spend your valuable time looking at properties and evaluating options, working with lenders and other members of your team, only to find out the landlords or sellers won’t negotiate with you yet. Many landlords and sellers won’t take their spaces off the market for extended periods of time while waiting for the tenant or buyer to be ready to transact because there is too much time before the transaction will actually take place.

    Or if they do negotiate, they won’t be willing to offer you even close to their best terms since they are going to lose income on holding a space vacant for an extended period of time. On the other hand, if they will put forth reasonable terms, it is predicated upon you moving forward immediately, which can leave you stuck paying for a space you can’t occupy for a period of time or paying unnecessary rent on your former space if you leave early.

    Too late

    When starting a transaction too late, an entirely new set of problems arises. To start, most people underestimate how long a commercial lease or purchase transaction takes. They imagine it is similar to buying a home or leasing an apartment, which unfortunately is not the same as a commercial transaction timeline.

    Trending article: 5 important things to know when renewing your dental office lease

    Simply identifying the top options and then negotiating a mutually agreeable deal can take several months.The legal process of reviewing contracts and finalizing details with lenders, architects, contractors, and equipment and technology providers comes next; this portion can also take months.

    This is followed by the build-out process if renovations are required. While you can build out a new space in six to 10 weeks depending on the size and scope of the project, you first have to design the space, then get construction documents and engineered plans created, and then submit for and receive permits to start the build out. After construction, you need to leave time for installing furniture, fixtures, equipment and technology, final permitting and approvals, while also leaving room for uncontrollable delays and change orders.

    If you are relocating from a previous office and you don’t vacate your former space prior to the lease expiring, you’ll likely pay between 125 to 200 percent of your last month’s rent based on a provision found in most leases called “holdover.” This allows the landlord to charge you a higher month-to-month lease rate as a penalty for not vacating or signing a new lease.

    Continue to page two to read more...

    Carr Healthcare Realty
    Carr Healthcare Realty is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every ...

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