Optometric Management Tip # 232   -   Wednesday, June 28, 2006
Your Office Space

I think many eye care practitioners don’t give enough thought to their office space. It just sort of happens and once it does, doctors often stay put longer than they should. The selection of an office often goes like this: the doctor 1) decides where he or she wants to practice, 2) looks around for office space to rent, 3) makes the best choice of what’s available and 4) makes the most out of what the facility has to offer. For something as important to your success as your office, it probably deserves more.

Potential advantages

If we take a broad overview of the most important things an office can do for you and your practice, I can boil it down to two major benefits:

• The investment value of the real estate.
• Office space as a competitive advantage in the marketplace.

These two factors convert to two action points:

• Own – don’t rent.
• Make the office impressive.

If you don’t currently enjoy both of these factors, it may be time to project ahead and develop a plan for the future.

Own – don’t rent

A recent study revealed that over 50% of optometrists with above average sized practices rent their office space. I’m shocked. I’m sure these doctors don’t rent their homes, and office space is really no different. Here are a few of the many good reasons to own your office building:

• Build equity in the real estate as you pay “rent”. Your mortgage payment could be about the same as the rent you’d pay for similar space. And even if it’s higher, the payment is going from one pocket to the other – you’re the landlord!
• Appreciation. You not only build equity as you pay the mortgage, real estate almost always grows in value over time.
• Tax benefits from interest payments.
• The real estate asset will pay off in retirement. You could sell the practice some day, and continue to own the building and receive rent; then eventually sell the building.
• Freedom to modify the facility as you see fit.

How to begin

Start by studying the area where you want to practice. Drive around and look at commercial districts and growth regions. Read the local paper and talk to people in the know about business development. Look at commercial real estate want-ads in the paper. Talk with a commercial realtor, your CPA and your banker. Consider the following real estate categories as you assess your local opportunities:

• Existing buildings that could be remodeled.
• Vacant land in areas zoned commercial.
• Buildings with teardown potential. This could include old houses in areas that are being transitioned from residential to commercial.

Make it impressive

The second way to make your office work for you is to make it a competitive advantage. Ask yourself why a patient should choose your practice over all the others in the community. The answer to that key question is a competitive advantage and you need as many as possible to build success. Your big competitive advantage could be you (your dynamic personality and charm), or it could be your staff, or it could be your office. Having all three things going for you is the best of all.

There are many ways to make an office impressive, but let’s not kid ourselves; large is good. People like space, and that includes patients and staff members. Reception rooms that are not crammed, optical dispensaries that offer lots of inventory, wide hallways, exam rooms and pretest rooms that don’t feel like closets; these are all features that make an impressive office.

Sure, one must consider the cost of a larger building, and cavernous wasted space is not good either, but in general, it’s best to stretch as much as you can as you enter a real estate investment. What seems expensive today, and what seems large, won’t feel that way in five years. Space allows growth and you are planning to grow.

Other ways to make your office impressive

• Exterior and interior design.
• Signage.
• Landscaping.
• Equipment and furnishings.
• Flow and internal efficiency.
• Good visibility.
• An eye care identity and destination. While owning a building and renting some of the space to other professionals may be a very smart move in the early stages (possibly a financial necessity), your practice ends up appearing as just another tenant. There is quite a bit of marketing power in using the whole building and positioning it as a dedicated eye center.

Can you afford it?

Of course you can. Don’t let the price of real estate scare you. Like a house, you don’t have to actually pay for the office building; you only have to make the monthly payments. You may very well end up paying off the mortgage, but it’s irrelevant as you enter the investment. Real estate is not a consumer purchase that declines in value. If you ever want to retire, or move or get out, just sell the building and pay off the mortgage. You will need a down payment, and there are taxes, insurance and building maintenance, but even with all that, ownership is almost always a smart move.

Worried about moving?

Don’t be. Sure, it’s a lot of work to move – but I wouldn’t worry about losing patients as long as you stay in the same general area. Moving is actually a huge practice builder. Moving will get you noticed by your patients and the community at large, and as long as the move appears to be to better and larger facilities, it’s a very positive thing. It signals that you are big player in the eye care market and that you are growing. It offers benefits to your patients and your staff members become more enthusiastic. You’ll see a jump in your practice volume.


Best wishes for continued success,

Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management