Jun 11
20
In this next in a series of dental office design examples that focus on “Don’t Assume Anything”, let’s talk about dental office build-out fees. As we’ve touched on many times, hidden fees and unexpected charges seem to pop up all the time. If you’re looking at a new dental office build-out or remodel, always go in with your eyes open, and don’t necessarily accept all of the fees, charges and assessments at face value.
Don’t Assume Your Dental Office Build-Out Fees Are Always Correct
Dr. K was very excited about the new ultra-modern shopping center just built in his neighborhood. He knew this impressive property was exactly the type of place he wanted to locate his new dental office. He set about selecting a space and we began the design phase of the building process.
I was especially happy to work with him on this project because we were going to have some amazingly unique features that mirrored the concept of the shopping center. But the doctor’s excitement began to fade when he received his sewer fee assessment. He showed the sewer bill to me and asked my opinion about why it should be so high. I was really surprised that the fee was over $7,000! This seemed quite exorbitant so I checked into it for him.
When a dental space is built it must fall into a description of usage. For instance, examples of various property usage descriptions that apply include general office, retail, restaurant, medical/dental, etc. Sewer fees are typically assessed by the usage – the more sewer usage, the higher the fee. That seems reasonable and makes sense.
In this case, however, the shopping center paid the lowest fees claiming that all of the spaces would be occupied by “retail” lessees. Unfortunately, the hidden implication here means that any other usage would require an upcharge. As a restaurant had just moved in before Dr. K, they used up the available credit balance which left the doctor having to bear the brunt of the upcharge and pay the full amount of $7,000.
When I explained this “upcharge” situation to the doctor he was able to negotiate with the shopping center and had his fee reduced to $2,000. The office was completed and we are all ecstatic with the results. Especially the doctor who greets his impressed patients with a beaming grin!
When building out a dental office suite there are invariably all sorts of unexpected fees. I strongly recommend you review all fees assessed and get the facts before plunking down your hard earned money.
This is one more example of how bringing in a qualified interior design professional can help you uncover and understand all of the hidden and underlying fees you will likely encounter when you build out a new or remodeled dental office. You don’t have to settle for every charge and assessment that’s thrown your way. Don’t be complacent about these unreasonable charges, you could be leaving thousands of dollars on the table!
If you're setting up, remodeling, expanding or relocating your dental office, don't take another step without obtaining this must-have FREE report.
The most common lease error I encounter that can be challenged and reduced is the calculated area in many leases. According to the National Association of Realtors, lease area should be calculated based upon the centerline of shared perimeter walls, the outside surface of unglazed walls and the glass surface of glazed exterior walls. Easily 70% of the time, the area quoted in the lease is notably in excess of the true space offered for occupancy, generally by 200 SF, due to miscalculating the thickness of the exterior perimeter walls. What compounds this difference is that other factors are based upon this inflated number, such as Rent, CAM (Common Area & Maintenance), Core Factor and COL (Cost of Liiving) increases. If we assume an 1,800 SF lease over 5 years at $30/SF, with a 5% Core, 10% CAM and 3% COL/year, then if the lessor misrepresents the space as 2,000 SF, over the 60 month term of the lease, that 11% error becomes an overcharge of $37,134.34. What makes matters even worse, is that occasionally,the area calculated includes portions of non-occupyable spaces, like adjoining stair towers or exterior eaves that are redundantly included under Core Factor. In one case in Baltmore, a doctor’s lease was determined by the landlord to be the gross building area, minus all the other tenants’, as this was the last space rented. An earlier realtor had given an anchor store a break, understating their area, and they tried to regain it on the back of the last tenant. Fortunately, precise measurements of the space rendered in AutoCAD provided an irrefutable exhibit in negotiations and the actual space listed in the lease decreased by 440 SF, a savings over the 7 year lease of over $100,000. I believe George Fedyna is absolutely correct. Every dentist procuring a lease needs George’s expertise and savvy eye to review questionable fees and to serve as an ombudsman on the client’s behalf. His breadth of experience is more valuable than a real estate attorney’s because he has designed and overseen more dental projects than any 10 real estate attorneys. If he could save me thousands of dollars on just the lease, think of what other aspects of ergonomic design flow and function could affect my productivity and profitability many more times over.