Welcome! We’ve represented dozens of medical based clients on their real estate transactions. Here’s my list of the top 4 mistakes to avoid when opening or expanding a Med Spa Practice.
There is a growing preference for non-invasive and minimally invasive procedures that offer cosmetic benefits without the downtime and risks associated with surgery.
Med Spas provide the best of both worlds, at a reasonable price.
And with advancing technology, aging population, and more disposable income, the demand for these services is far exceeding the supply.
So what mistakes should be avoided if you’re a med spa owner?
1. Not Looking at the Location Data
If you’re not using data and demographics to help guide your decision on location then you’re behind, because your competitors are.
These are the data metrics we use for our clients:
- Income Levels
- Population density
- Age Ranges
- Traffic counts
- Competition Ratios
This is the first thing that should be calculated when deciding which location to open your practice before you even tour 1 location.
How do you access this data?
There are mostly paid services such as Esri (ArcGIS) or QGIS but gathering the most up to date and useful demographics info can be difficult.
That’s why partnering with a data company or a Commercial Agent with relevant data access is the best decision for Med Spa Owners.https://demographics-austin.hub.arcgis.com/documents/fa8cc93233b84d16bc83ef47e6001a79/explore
2. Not Knowing the Market
Market knowledge is the core value on determining if your Med Spa will be successful and often ties into your demographic research.
Understand how much demand for a med spa is in the area you’re looking into.
How to determine demand?
Determining demand for your area is identifying who your customers are and who your competition is. Things to consider when looking at an area are:
- What’s the demographics? Med Spas typically cater to ages 30-65 with higher disposable income
- What services are nearby med spas offering? Are there gaps in service that you could provide for customers?
- How busy are your competitors? Look at google reviews. Call other med spas to find out how booked out they are. If they seem busy, that’s a good thing.
- Use Competition Ratios. One easy metric is a simple competition ratio. Taking the target demographic population divide it by competitors will give you a high level look saturation.
Market Knowledge should be heavily researched from a business and real estate standpoint
3. Negotiating an Unfavorable Lease
Do not overlook negotiating strong lease terms. This doesn’t include just the monthly rental rates. There are various lease terms that should be in your favor or at least fair with the Landlord.
Here are just some of the lease items we negotiate for our clients:
- Caps on rental increases and NNN expenses. NNN is tenant’s share of Taxes, Insurance, and common area maintenance.
- Clear outline responsibilities for both tenant and Landlord such as who covers what costs for maintenance or damages
- Free Rent and Tenant Improvement Allowance. These are crucial as Landlord will have the ability to grant the tenant money up front to help pay for internal construction. You need to know what’s market for this!
- Sufficient construction time. You will only have a certain allotted time for construction before your rent commences.
- Exclusivity: to prevent competitors from being in the same building you’re in.
If you’re not confident negotiating these items, get with a commercial agent to help represent you so you’re protected.
4. Not Hiring a Commercial Agent
You can see by now just how vital it is to get the real estate aspect of your location correct. That’s why hiring representation is a smart decision for your business.
A commercial real estate agent will find you with:
- Finding the best location
- Educate you on the market
- Negotiate strong lease or purchase terms
Also: Landlords compensate the agent for their services. There’s a built in commission with every transaction. That’s why choosing to have representation only benefits the Tenant.
Get an expert on your side. Connect with us to see if we could be a fit in helping you with your purchase or lease.
Please reach out if you have commercial real estate needs in Austin, TX.
Tristen Palori
Office: 512-580-7800
Email: tpalori@foresitecre.com
License: #717593
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