Common Mistakes Healthcare Practices Make in Real Estate Negotiations

Did you know real estate is likely your healthcare practice’s second-largest expense after payroll? Yet many healthcare professionals leave thousands on the table in poorly negotiated leases. An unfavorable lease or real estate negotiation can lead to unnecessary expenses, potentially costing you tens or even hundreds of thousands of dollars over time. That money could be invested back into your practice or used for your retirement fund. Negotiating a favorable lease can improve your business profitability and reduce debt, even if you’re looking to upgrade your space.

Drawing on decades of experience working with healthcare practices, I’ve identified some of the most common mistakes made during real estate negotiations. Avoiding these pitfalls can help you save a fortune and secure better terms for your healthcare practice.

Mistake #1: Trusting the Landlord or Seller to Offer Their Best Terms

Landlords and sellers are business people—they’re looking to maximize their profits. They won’t voluntarily give you the best deal or price. A landlord might claim they’re offering a “fair deal” or a “reasonable price,” but unless you’ve done your homework, you have no way of knowing if that’s true. Without the right knowledge, you could end up substantially overpaying on your lease.

Think about it this way: If you were selling your home and a buyer was willing to pay significantly above market value, would you insist on selling it for less? Of course not. Landlords approach lease negotiations with healthcare practices the same way—they’ll push for the highest rent possible and offer minimal concessions unless you push back.

Pro tip: Engage a real estate agent who understands the healthcare market. They’ll help you navigate the negotiation process, present alternative options, and secure the best possible terms.

Mistake #2: Using Neighbors’ Leases as a Benchmark

It’s tempting to gauge the fairness of your lease terms by comparing them with neighboring tenants, but this is not always fair. Just because your peers are paying a certain rate doesn’t mean it’s the market rate—or even a good deal.

Here’s an example: A doctor we worked with had been in the same building for 20 years, paying $35 per square foot with no tenant improvement allowance or free rent. When we asked why he thought this was fair, he said it was because the other healthcare practices in his building were paying the same rate. But what he didn’t know was that a new tenant on the first floor had just signed a lease for $24 per square foot, with three months of free rent and over $105,000 in tenant improvement allowances.

This kind of disparity happens all the time. Landlords know they can get away with charging higher rents to healthcare practices when tenants lack knowledge or negotiation skills. Comparing your lease to others in your building might seem logical, but unless those tenants have negotiated aggressively, you could all be overpaying together.

Pro tip: Don’t rely on anecdotal evidence. A real estate agent can help you assess true market rates and negotiate from a position of strength.

Mistake #3: Skipping Market Research and Comparison

The foundation of any successful negotiation is knowing your options. This means understanding what other spaces are available, how they compare to your current or prospective location, and what terms are being offered elsewhere. Without this knowledge, you’re at a disadvantage.

Some healthcare practices try to bluff their way through negotiations, but seasoned landlords can spot this a mile away. If they sense you’re unprepared or not seriously considering other options, they won’t offer you better terms. Worse, an unrealistic or overly aggressive approach can backfire, leaving you with fewer opportunities.

Market research is essential, but it’s also time-consuming. You can invest the hours yourself or hire a professional to manage it for you. Either way, going into negotiations without a clear understanding of market availability and comparable deals is a mistake that will cost you in the long run.

Pro tip: Always approach negotiations armed with data. Knowing what’s out there gives you confidence and ensures you won’t settle for less than what the market offers.

Why Avoiding These Mistakes Matters

Real estate expenses have a direct impact on your practice’s bottom line.

Paying too much in rent or missing out on concessions like free rent or improvement allowances can add up over the years. These unnecessary costs don’t just affect your income—they can also limit your ability to invest in new equipment, hire staff, or improve patient care.

The good news? These mistakes are avoidable. By working with a real estate professional that specializes in healthcare practices, you can level the playing field and secure favorable lease terms.

Take Control of Your Real Estate Negotiations

Don’t let your next lease or purchase negotiation become a costly mistake. Here are a few key steps to ensure your success:

• Hire an expert: A real estate agent can provide the knowledge, leverage, and guidance you need to secure the best terms.
• Start early: Begin negotiations well before your current lease expires or you need to move. This gives you more options and reduces the pressure to settle.
• Do your research: Know the market, understand similar deals, and assess your alternatives. This will put you in a stronger negotiating position.
• Compare multiple offers: Engage with multiple landlords or sellers to create competition and drive better deals.
• Think long-term: A well-negotiated lease or purchase agreement can save you money for years to come, so it’s worth the effort.

Why Choose Real Estate Representation?

CARR specializes in helping healthcare practices navigate the complexities of real estate negotiations. Every year, thousands of practices trust us to handle their lease renewals, expansions, relocations, and purchases. Our team of experts works exclusively for tenants and buyers, ensuring your interests always come first.

By partnering with us, you can save time, reduce stress, and secure terms that benefit your healthcare practice. Whether you’re starting a new practice, renewing a lease, or purchasing property, we’re here to help.

Final Thoughts

Real estate is a major expense for healthcare practices, but it doesn’t have to be a drain on your resources. By avoiding common mistakes, engaging professional representation, and approaching negotiations with the right strategy, you can turn this expense into an opportunity for growth and success.

To find out more, contact Drilldown Solution to connect with Sam Goodrich from CARR. Sam is a real estate agent specializing in working with dental and other healthcare practices. With the right support, you can save money, improve your practice, and focus on what matters most—providing exceptional care to your patients.

This was a guest post written by Sam Goodrich from CARR Real Estate.

Sam specializes in real estate for medical, dental, veterinary, and optometry practices, as well as other professional small businesses. He has 25 years of experience in medical and dental sales and management, including nearly a decade managing dental distribution reps.

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