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where to locate your dental practice

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Even with more commercial properties available in and near big cities since COVID forced many CBD businesses to close, this doesn’t necessarily mean such sites are where you should locate your practice.

Every crisis is also an opportunity, and when the pandemic lockdowns forced many CBD businesses to close, it looked like a great opportunity for healthcare practitioners wanting their own place in the city. Unfortunately, it wasn’t.

“What really happened is that a lot of demand pushed from the CBDs out to the suburbs,” explains Julian Muldoon, director and founding partner of 1Group Property Advisory. “The fact of the matter is, most of the suburbs don’t have enough commercial property available to deal with the growth in demand for services within middle ring and outer suburb areas.”

Julian says the CBD commercial property sites that are struggling with vacancies tend not be the ones favoured by smaller practices.

Fringe dwellers

With former CBD businesses competing for premium spaces in city fringe areas, practices who wanted a spot close to the city for the convenience of seeing the working population as well as locals, have found themselves being pushed further out.

“You’re tapping into a higher affluence in those fringe markets,” says Julian. “I’d say most opportunity sits in large greenfield areas, which have significant population growth, and lots of construction happening. But they tend to be, in some cases, lower socio-economic footprints so the viability of mixed billing or private billing, or more diversified offerings, tends to be harder.

“The difficulty in more affluent areas closer to town is the old money that tends to hold commercial property doesn’t really feel the difficulties of economic downturn. It’s not like the residential space where you’re geared to 80 or 90 per cent and using negative gearing to help offset costs. Most of the commercial property owners out there are generally sitting on asset with no debt. So while it’s frustrating for them, it’s not a financial problem when they haven’t had any income coming in.”

Your point of difference

The upshot of this, Julian says, is it would be unwise to let a commercial property strategy lead the timing of your business strategy. “If you do that, you’re trying to pick the market,” he says, “I don’t think you’ll ever find a time when high-quality commercial properties are selling cheaply.”

He adds that healthcare property is always hard to obtain because it generally requires a certain footprint, accessibility, age, ease of conversion, and access to parking. “It’s always a tough property to find because it’s always a more premium property in the particular catchment you’re looking at,” he says.

It’s wiser to let your offering guide your business strategy, then look for something suitable, rather than a particular area. “If you’re doing a very general offering that doesn’t have a real X-factor, the greenfield option tends to be best because it’s purely based on ratios analysis that there’s a big population without a healthcare provider.

“What we’re seeing in the fringe areas is more diversified offerings. It might be a health hub, or that there’s specialised unique services for a certain demographic or population catchment. It’s now more about a deeper competitor analysis that’s required to overlay or integrate into the location strategy. Because I think any dentist will say there’s always going to be a competitor near where they set up these days. It’s very hard to find an area that’s pure, or has no competition, so it’s really about what does that competition do and how you differentiate.”  

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