How To Know If You’re Getting A Good Deal on Your Lease

Christian Gile • September 24, 2025

The real question isn’t just how much your lease costs, it’s whether the deal you’re getting is truly competitive in today’s market. Too often, tenants hyper-fixate on base rent when evaluating a lease. They assume that if the rate is low, they’re automatically getting a good deal, so they sign without a second thought. But in doing so, they overlook other financial and non-financial components of their lease and miss out on thousands of dollars in potential savings.

This is why tenants need to pay attention to the full scope of lease economics. The good news is that understanding lease economics doesn’t have to be complicated or overwhelming. Let’s break down some key aspects in plain language.

What Is Fair Market Rate?

An important tool for evaluating your lease is the fair market rate, which reflects what tenants are actually paying for comparable properties. This number is shaped by a variety of factors:

Location: Is the space in a desirable area? Is the nearby market saturated with competitors, or are there businesses that will drive more traffic to you? Is the space accessible by public transit and major roadways? Is it easily visible, or tucked away?

Building Type: Has the building been recently renovated? Does it meet ADA standards? Does it include the specialized features your practice needs?

Building Appeal: Is the property well maintained? Do the lobby and common areas reflect the professionalism and overall feel of your practice?

To get an accurate view of the fair market rate for the space you’re evaluating, you need to benchmark against comparable properties. This is where a specialized commercial real estate broker can be invaluable. Their experience and market knowledge can make all the difference when measuring fair market value.

Tenant Improvements

It’s rare to find a space that perfectly meets your needs from the start. Whether it’s repainting, or installing lead-lined walls for X-ray rooms, some level of renovation is almost always required. Many leases include what’s called a Tenant Improvement (TI) allowance to help offset these costs. This is funding provided by the landlord to customize the space for your needs, and it can make a huge difference in reducing your upfront expenses when opening your doors.

If you’d like to dive deeper into how TI allowances work, we’ve published an entire blog post that explains everything you need to know. [Click here to read it.]

Abated Rent

Signing a lease isn’t the end of your worries when opening a new practice. Before you can start generating cash flow, you have to get through the build-out and move-in period, which can become very expensive very quickly. Paying rent on a space before your doors even open can sink a practice before it ever starts.

This is why some leases include a period of Abated Rent, which gives you free rent on the space for a set number of months.

Other Concessions

So far, we’ve focused on the financial side of lease economics, but there are also non-financial concessions that can impact the profitability of your practice. These need to be carefully evaluated when measuring how strong a lease really is. Here are a few key examples:

Signage Rights: What rights do you have to place your sign on the property? Will your practice be featured on freestanding signs near the road or entrance? This affects visibility to passing traffic and how easily clients can find you. Will your name appear on building directories or lobby signage to help guide clients to your space?

Parking Allocation: Do you have reserved parking for your patients and staff, or is it shared with the rest of the tenants? If it’s shared, is there enough parking available to meet your needs?

Sublease/Assignment Flexibility: It’s important to think about the long-term future of your practice. What happens to your lease when you’re ready to retire or relocate? Does your lease allow you to sublease the space or assign the lease to another party?

Each of these factors can positively or negatively affect the operations, visibility, and long-term flexibility of your practice. That’s why they should be evaluated alongside the financial terms of the lease.

Conclusion

Every detail of lease economics can have a significant financial impact on your practice. These terms are often nuanced and interconnected. No single factor is more important than the others. Instead, lease evaluation should take a holistic approach, where every clause is carefully weighed in context and negotiated to achieve the best possible outcome for your practice.

After graduating from the United States Air Force Academy in 1998, Christian served in the U.S. Air Force for 13 years in Texas, California, Arizona, and Colorado. After his service, Christian Gile founded GILE Commercial Real Estate specializing in medical real estate and investment services. Christian has personally negotiated over 3,000 Commercial Real Estate deals for his clients. Christian loves what he does, enabling him to produce extraordinary results; the evidence? It is in the wealth he has created for his clients.

Phone: (602) 980-3171

Email: christian@gilecre.com

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When to Sell Your Practice: Understanding the Impact of Declining Revenues

By Christian Gile • April 30, 2026

One of the hardest conversations I have with physician clients is regarding selling their practice. Most of them think the ideal time to sell is when the business is humming: revenues are strong, patients are loyal, and all is well. They're right. What many don’t anticipate, however, is how significantly timing can impact outcomes. Declining revenues are more than just a warning sign—they can meaningfully affect the overall value of a practice. Why Declining Revenues Decrease Value in Your Practice When you sell your practice, buyers aren't buying your “past” success. They're buying cash flow in the future. The moment revenues start going down, you've really changed what you're selling. A revenue-declining practice sends a buyer one message: Risk. Buyers will discount substantially for that risk. Practice valuations are normally done on a multiple of EBITDA or gross revenues. If your revenues decline 15% and your margins contract, you're not only losing 15% of your practice value. You're losing that plus the multiplier effect, which can reduce your valuation by 30% or more. Hang on another year while revenues continue to fall, and you might find yourself with an unsellable practice at any price. The "Just One More Year" Trap I see this pattern all the time. A physician notices profits slacking but convinces themselves that it is only temporary. Maybe it's a seasonal dip, some key patients moved away, or insurance reimbursements were received late. They convince themselves they'll turn things around and sell next year when the numbers are better. The problem is next year rarely gets better. What started as a 5% reduction in revenue becomes 10%, then 15%. Margins shrink. Turnover increases. By the time the physician is ready to admit they need to sell, they're already negotiating in a position of weakness. The practice that could have sold for $1.2 million two years earlier might now fetch $600,000, if anyone will even look. Conclusion The best time to sell is when your practice is profitable, and the story you have for a buyer is one of growth and possibility. Deteriorating revenues are a red flag and must not be ignored. If you see a pattern of declining revenues taking shape, don't wait until it reverses itself. Have an independent assessment, talk to an advisor familiar with practice sales, and determine what options you have. The line between selling at the right time and waiting too long can be the difference between financial anxiety, and an easy retirement. Timing is not everything when it comes to selling your practice, but it is close.

Should I Buy an Established Practice or Scratch-Start?

By Christian Gile • April 23, 2026

One of the first major decisions physicians make when going into private practice is purchasing an existing practice, or starting one from scratch. Both can succeed, but they involve radically different risk, timelines, and expense. The Case for Buying an Established Practice Buying an established practice likely gives you immediate cash flow. You receive a patient base, trained personnel, existing payer contracts, and infrastructure. That is to say that you start making money immediately, instead of taking months or years to establish a patient base from zero. The finances are likely more stable. You can analyze prior revenue statements, learn about referral patterns, and establish profitability before investing. This is sometimes simpler to obtain financing for. The compromise is cost in the long run. You are, in essence, purchasing the seller's reputation and systems which may not always be the perfect fit. If the previous owner had poor relationships with referral sources or outdated processes, you will have those problems to resolve. The Case for a Scratch-Start Beginning from scratch gives you total control. You choose the location, design the space to your own specifications, hire your own staff, and build the culture that you want. No legacy baggage and no politics of inheriting another person's practice. The entry cost is sometimes intimidating. Sure, you'll still be paying for build-out and equipment, but you're also not paying top dollar for goodwill. The down side is time and risk. Building up a patient base requires time, and during that time, you'll have expenses while working on increasing your revenue. Conclusion If you need to start in a hurry, buying an existing practice is usually the better choice. If you are not bothered about a longer timeline and value autonomy, a scratch-start may be preferable. There isn't a one-size-fits-all, “right” solution. Talk to advisors who understand practice ownership, be conservative in assumptions, and choose the path that best suits your objectives and risk tolerance. The wrong choice will cost you money and time. The right one sets you up for long-term success.