“Location, location, location…” This wise old real estate adage does not just apply to buying a commercial real estate building, but is also relevant to healthcare groups who are looking to either relocate or expand to a new office. Whether you are moving your practice to another state or just a few blocks away from your current office, choosing the right location will become a vital strategy in the overall success of your organization.
In the olden days, a doctor might have just placed a sign outside a window and started seeing patients. Nowadays, there’s a doctor on every street corner! How can you possibly position yourself so that patients actually come to you?
An obvious way is to survey the population-to-professional ratio for the specific area in which you are interested. Obviously, the lower the number of competing professionals, the less competition in the market. But, where exactly are your competitors located? How aggressive is their marketing? What kinds of marketing do they do? Is it effective?
This simple analysis may open up some overlooked and exciting opportunities for you. Professionals often overpopulate upscale areas, while rarely considering enormous opportunities that exist a few miles away in middle and even lower income neighborhoods.
Research population statistics and determine whether the region of your choice makes practical sense for your organization. Given your profession and specialty, do you want to target men, women, young or old, blue or white collar?
Also consider whether or not the population is growing or declining – it has been easier to break into newer communities than mature ones where you would have to take patients away from practitioners who set up shop many years ago.
If you own an elective or cosmetic practice, you should also consider education and income levels, though be careful about the assumptions you make. For example, we know many highly successful plastic surgeons quietly performing impressive volumes of breast enhancement and liposuction surgeries in low and middle income neighborhoods where their competitors would not consider.
We like to suggest choosing a minimum of at least three submarkets to explore. You can get very detailed demographic research from our brokerage office regarding these potential submarkets. Also, we will provide you a detailed map of existing competitor locations, given your specialty, as well as a center per population. This will determine if this market is saturated or requires medical growth now and in the future.
Our clients have been discouraged by the data provided by chambers, local and political organizations as they often are dated, or biased. Most of the larger brokerage shops will subscribe to non-biased research and news to assist in location analysis.
What are the major thoroughfares for business and residential commuters within a five-mile radius for your area? Where are popular businesses such as supermarkets and banks located? The most popular businesses attract potential clients for your organization. Also, upscale businesses can attract upscale clients – an example, Starbucks.
An issue many healthcare professionals do not consider is traffic patterns. This takes some research if you are going to attempt to locate yourself without brokerage assistance. But, you can go the city records for existing traffic counts around the sites you are considering. Or you can go out yourself and, literally, count the cars going down your street per hour, morning and afternoon. As a rule of thumb, 35,000 cars a day should be considered when evaluating a retail location, but what you are not privy to are the streets that have the potential for massive growth in the future. Also, remember that while we all despise sitting in traffic, the slower things move, the greater the visibility.
Something else you may consider is what side of the street is most convenient to your customer. If most of your patients make appointments in the afternoon hours and congestion is heavier going west, that is the side you choose. Another consideration is accessibility: No one likes having to U-Turn, especially in Houston.
If your practice is consumer-direct, frontage signage is crucial. So, once you’ve narrowed your choice to a few locations, check local regulations on outside office signs. Are there signage restrictions enforced by the landlord? If your customers cannot see you from the street, you may as well be invisible, so it may be crucial to negotiate for your sign’s visibility. But, what does signage matter when the street is inundated with them? Another negotiation point.
Additional items to consider:
Make sure you study at least five to ten sites in your targeted area. When chosen, consider the following:
- If you rely heavily on insurance, consider the employers in the area. As a tip, marketers often work to get an “in” with large local employers who offer favorable insurances to their employees.
- Does the building provide enough square footage for your use, or collaboration with other doctors. You may have expansion possibilities to consider.
- Does your potential location have well-lit, convenient parking for your patients as this is the #1 complaint?
- What is the image of the building, and how does it look? Some landlords take great pride in keeping their building clean and modern, while others simply let it depreciate to save money on costly expenses. Something to know, before you move in.
- Consider hospital proximity. Beyond the obvious convenience of locating close to the hospital, you also will likely benefit from the patient perception that you are located in a recognized healthcare area.
- If you are a specialist, it often helps to locate in a high density medical user building in close proximity to large, referring practices. For example, a landlord that we are familiar, will go out of her way to introduce physicians to one another. If you choose this route, remember that ground floors are best available space for medical users as 100% of the traffic will go right by your doorstep.
- Most consumer direct practices (e.g., family practice, general dentistry, etc.) can benefit greatly from being visible, and generally should avoid upscale medical buildings. Instead, consumer direct practices should generally choose either free-standing buildings (with signage and street frontage) or even retail center locations.
- If your group chooses a retail location (strip center or mall), the greater your visibility, the more you will pay a landlord. But, keep in mind that the extra rent that you are paying is simply a marketing expense, which you can and should evaluate on a return on investment basis.
- You should talk to your accountant about the relative advantages of owning vs. leasing your office space. We have several examples for buildings in the Greater Houston area and would provide you our analysis without charge. Beyond the obvious tax and income issues, make sure you consider the tradeoff between long term investment potential vs. short term cash flow, flexibility versus hassle factors, personality, etc.
- Finally, make sure you use common sense here. No kidding, a podiatrist once called us in desperation after relocating to the second floor of an office building which did not have a functioning elevator. Doctors already have the stigma of poor business decision-making – this request did not help their case.