Location, location: where to put your practice

10 minute read


Eight factors to bear in mind when choosing a location and property.


The location for a medical practice should be carefully considered and strategically decided upon with more than just a love for a specific suburb and a gut feel that the area will deliver on the right type of patients you want to attract.

Starting a private practice may be the culmination of years of dedication to your medical training but it is also a massive undertaking. And to turn a private practice into a successful and thriving business, a lot of things need to be taken into consideration. One of those things being, the location of your practice.

There are very few other businesses that require as much insight and local intel before finding suitable premises than a medical practice. To understand why it is so important to get the location of your private practice right, here are eight rules to abide by that should help you make the right choice.

1.  Research and analysis on a broad range of trends needs to be conducted

When starting a private practice, you not only make your medical skills available, you also need to combine that with running what is a really complex business model in, sometimes, very specific locations.

Depending on whether you’re a GP who’s principally looking for foot traffic and easy access via public transport or a specialist who needs to be close to a hospital to attend to urgent situations really quickly on short notice, the research for the right property location will change dramatically.

A lot of needs analysis work around demographic metrics and population changes in specific areas to understand what types of services are in demand where, will need to be done to ensure you’re looking in places that make sense for your business – taking things like competition in the area into account – and don’t end up wasting time in the process.

2. The business plan and vision determines the location of your practice

The first thing to do is to always start with your business plan and the vision you have for your practice and the location needs to match and reflect that – not the other way around.

When starting a private practice, it’s easy to get bogged down on the location that you know, or want or are interested in but sometimes, it can limit you from finding the appropriate property that will be the best fit for your needs and growth plans.

3. Starting a private practice starts with understanding the zoning of your target region

There are only certain zones that are suitable and compliant sites to be converted into medical practices and they generally have some limitations on the size.

Whether you’re in a residential or commercial zone, you will need to think about things like:

  • Will you require special approval for car parking dispensations?
  • Is the site accessible easily? 
  • Will there be a potential need for widening crossovers?
  • Does the property have an adequate building footprint for a health clinic?
  • Will it require an extension of the roof line?

These requirements specific to a health care business can bring a lot of complexities and delays to the process.

4. Timeline to completion is tied to the style of property you’re looking at

The location is one thing but the style of the property you’re looking to move into will also be a determining factor into your timeline to completion and how easily you can move into your practice and start consulting.

Because depending on the type of property, you might be able to set it up very quickly depending on how suitable the property is in its current form or, you might need development approval.

At present, we see a movement in the market away from residential conversions because they tend to be smaller clinics – not as feasible to run anymore. They tend to be properties that don’t have the right patient flow and workflow without really significant development or, the price point may be too high.

5. Being in close proximity to your competitors isn’t necessarily a bad thing

Again, this is a consideration that is somewhat specific to medical practices but when starting a private practice and looking at your practice location, competitors’ location is important to take into account. It may seem counterintuitive but being close to competitors may not be a disadvantage, it really depends on what health services you are offering.

Starting a general practice

General practices generally will look at high density population areas with other complementary health services like dental clinics or pharmacies for example and it’s ideal to be in an area where there are less direct competitors (other GPs). Generally, to determine the right location for a general practice, there are two metrics you should look really closely at and they are a strong population growth which is effectively tied to a strong pipeline of property development in the area.

Starting a non-GP specialist practice

If you’re a non-GP specialist, you need to look at your competitive market differently. It is a smaller world so to speak and many specialists know more about their competition than in general medicine. 

When looking at a location for you practice, you may be considering things like:

  • Where are my direct competitors who operate in the same specialty?
  • How many patients do they see?
  • How well are they doing in that area?
  • Can we assume they will be slowing down or retiring soon?

In some cases, the presence of a health hub in the area can be advantageous to leverage off foot traffic and referrals from other providers. Sometimes, looking at what type of ancillary providers is in the area is equally as important as looking at the competition.

6.  Independent data analysis needs to confirm your area of choice is strategically sound

Most doctors know who their target market is and who has the highest uptake of that service.

As a doctor about to start your own private practice, you may have already worked in a specific area – in another clinic perhaps – and you know that there is demand for your services. But is this a hunch or can you confirm that it is a considered, proven strategic move?

You may just be onto something here but nevertheless, it is always worth having an independent analysis on the region done to understand where it’s heading and confirm your choice.

7. The decision to lease or buy a property for your medical practice is critical

Leasing your private practice property

Starting a private practice leasing can carry a lot less risk because you’re taking on what is a five or seven or 10-year term. Instead of securing a site that would require you to pay stamp duty and take on debt at a time when you’re also starting a new business and stretching yourself financially.

The landlord could be willing to give a rent free period while some work is being done to the property, so the advantage there is you take on less debt and you have less overhead for the first six to 12 maybe even 18 months as you’re starting your business activity.

The downside of course is that you’re investing in and renovating someone else’s property and you don’t have security of tenure – which could deter a few doctors from going down the leasing route.

Leasing allows you to get to market quicker, with less overheads.

Buying your private practice property

Buying and occupying the property generally increases the property value by anywhere between 20% to 40%.

When you buy, you’re getting the wealth creation aspect of buying a vacant property, converting it to a medical practice, renovating and signing a long term lease to it. So that is a huge financial upside for any doctor to take a vacant site and turn it into what’s considered an A Grade property asset.

It is a massive financial commitment though, one that doctors need to consider carefully.

If you were to buy the property then lease it back to your business and, assuming you run into some challenges financially, then you can put the property on the market and most likely get far more for it than what you paid. Nevertheless, it is a decision that needs to be carefully made in consultation with your trusted medical tax specialist in order to understand the level of debt you can absorb and take into consideration your entire (personal and professional) financial position.

One thing to note too is that selected lenders are generally happy to lend money to medical professionals, and in some cases up to 80% even 90% of the value of the property if it’s for private practice use. A specialist medical broker can help you decipher the right lenders to approach and help you secure that loan you won’t be able to get on your own.

The challenge with buying is actually that the commercial property market is very tightly held, and it doesn’t move in the way as the residential market does.

8.  Starting a private practice is a team effort – get your advisors talking

In most cases, doctors who are looking to start their own medical practice may already have a few existing relationships in place, it may be an accountant or financial planner for their personal affairs, potentially a business advisor. But to get a medical practice off the ground successfully, having a team of trusted specialist advisors experienced in the medical sector goes a long way.

Beyond these relationships, if you don’t have a property advisory team helping in your property search and location strategy, there can be up to six or eight key roles that need to be involved in the process for:

  1. a provider for property valuations;
  2. a research team;
  3. a town planning team;
  4. an architect & engineers, and
  5. a builder.

If you’re trying to coordinate everyone, things will most likely get missed and it’s very hard for everyone to understand where each other’s blind spots are. You really want to have one person like a specialist healthcare property advocate who takes the lead on the project and is connected to the rest of your team.

If you’re starting a private practice and want to learn more about how a specialist medical property advocate approaches the process, understand where other doctors get it right, where they get it wrong, or just make sure you make more informed decisions, book an initial chat with DPM.

Julian Muldoon is director and founding partner of 1Group Property Advisory.

Disclaimer: This article contains general information only provided by 1Group Property Advisory, and does not consider your personal objectives, financial situation or needs. DPM Financial Services recommends you obtain advice concerning specific matters before making a decision. Visit 1Group Property Advisory for more information.

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