Financial considerations when leasing your own acupuncture clinic space

I had a pretty good business class in acupuncture school. The professor was great and had a lot of business experiences she shared with the class. Unfortunately, it didn't include much information on the nuts and bolts of securing your own clinic space. So, when I went to rent a space for my clinic, I quickly realized I had no idea what I was doing. So, this series of entries will share the two-steps-ahead knowledge I've gathered while searching for, leasing, and having a clinic space for 2+ years.

This entry focuses on the financial side of picking a clinic space! In this entry, I cover:

• Background info on how I came to rent my own clinic space
• Important real estate terms to know when looking for space
• How to calculate your monthly rent (including some things you may not think of!)
• Considerations when deciding if the space is a good financial fit for you
• Examples of expenses to consider in your start-up budget
• My two biggest pieces of advice when looking for a property to lease

This entry is about becoming a primary leaseholder on your own clinic space (not subletting someone else's space), but it can still be helpful for people who are looking to share space with others!

Background

To set the scene a bit: while I was in school, I had zero intention of practicing anywhere other than Minneapolis. My husband and I had no plans to move. So, all my planning and preparation was geared toward the resources and network I had in Minneapolis. I had tentative plans to share clinic space with a supervisor I had in a student clinic, and if that didn't pan out, I likely could have found another space to share fairly easily. Then, instead, we moved to Des Moines in April 2022 (in the middle of taking my boards, but that's a story for a different day).

Suddenly, all the previous plans I had became irrelevant; Des Moines is a tiny fraction of the size of Minneapolis (fun fact: the entire population of Iowa is the same size as the Minneapolis/St. Paul metro area), acupuncture is generally less well known and prevalent in Des Moines, and I didn't know the city that well and so I wasn't sure which neighborhoods would work well for me. There were (and still are) less than 10 licensed acupuncturists in Des Moines!

I quickly found myself in the position of needing to find my own clinic space to lease. I (literally) didn't know anyone in town, and frankly, the mindset about COVID policies and attitude towards the LGBTQ+ community in Iowa made me leery of signing up to share space with someone I didn't know well.

So, while working on my boards and license and getting my PLLC, I started to explore different neighborhoods and look into space for a clinic - and the reality of my total lack of knowledge about commercial real estate quickly set in. I have rented over 15 apartments in four states, but commercial real estate is a completely different beast from residential.

Real Estate Terms 101

Let's start with a bit of real estate terminology to keep in mind, with a bit of commentary from me:

• Lease terms:
  • NNN - "triple net" - you're responsible for a proportional cost of building taxes, insurance, and maintenance expenses. This is the most expensive lease term, and it is also pretty common.
  • Full Service Gross (FSG) - the listed price per square foot is your price, and the property owner is responsible for the additional expenses (but your price per sq ft will likely be more than NNN).
• Modified Gross (MG) - there are some expenses you'll be responsible for, but not all of them. You'll have to ask which expenses are your responsibility.
  • Get an estimate of historical costs, and make sure your responsibilities vs theirs in writing in the lease.