Across the country, dental practices—both new and established—are feeling the pressure of rising commercial lease rates. As real estate costs climb, many practices are wondering: Are lease rates now one of the biggest threats to profitability and growth in dentistry? The short answer is: yes—but there are strategic paths forward.
What’s Happening with Dental Office Lease Rates?
Over the last few years, commercial real estate markets have seen significant shifts. Factors like limited office space availability, higher construction costs, and stronger demand for prime real estate have contributed to increasing lease rates in key suburban and urban markets.
For dental practices, which rely on a comfortable and accessible physical space to serve patients, this trend poses a real challenge:
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Higher operational expenses
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Tighter profit margins
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Increased financial risk for startups and expansions
Why This Matters for Dentistry
Unlike many service industries, dental care must be delivered in person—and patients expect a welcoming, modern office environment. This means practice owners don’t have the option to cut costs by going fully remote or digitizing away the need for physical space.
So when lease rates rise, dental practices have fewer levers to pull compared with other businesses.
Who It Affects Most
New Practices & Startups
New dentists opening a first location are often hit hardest. Many start with limited operating capital and take on large lease obligations that can strain cash flow before the practice reaches stability.
Growing Practices
Multi-location groups, like Dental Service Organizations (DSOs), also feel the pinch—especially when expanding into competitive markets.
Independent Practices
Smaller, independent offices may have less bargaining power when negotiating with landlords than larger groups with more credit strength.
Solutions to Rising Lease Costs
While escalating lease rates are a challenge, they aren’t insurmountable. Here are several strategies practices can use to navigate this environment:
1. Negotiate Longer-Term Leases With Incentives
Landlords often value long-term tenants. Offering a longer lease (e.g., 7–10 years) can encourage landlords to provide:
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Lower base rent
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Tenant improvement (TI) allowances
These incentives can significantly offset higher nominal lease rates.
2. Prioritize Strategic Location Decisions
Choosing the right location isn’t just about visibility—it’s about balancing cost with patient accessibility.
Ask:
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Is the location convenient for your target patient demographics?
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Can you justify a slightly less central location with lower rent?
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Are there emerging submarkets where lease rates are still attractive?
Sometimes moving just a few blocks outside a premium area can save tens of thousands annually without hurting patient volume.
3. Consider Medical Office Buildings (MOBs)
Medical Office Buildings often have rental structures tailored to healthcare providers and may offer:
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More flexible build-out options
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Better parking
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Longer-term stability
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Tenant-friendly lease terms
These buildings can be more cost-effective and offer better alignment with dental office needs.
4. Reevaluate Office Design and Utilization
Maximizing efficiency inside your space can help offset lease costs. Consider:
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Designing with flexible operatories
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Incorporating teleconsultation rooms
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Sharing space with complementary providers (e.g., orthodontists, hygienists)
More efficient use of square footage helps you get more value per square foot.
Looking Ahead: What Dental Practices Need to Know
Increasing lease rates are more than a short-term issue—they reflect broader economic trends in commercial real estate. But with smart planning and proactive strategies, dental practices can not only survive but thrive in this environment.
Key takeaways:
✅ Lease rate increases are real and impactful
✅ Strategic negotiation and planning can reduce financial pressure
✅ Practice location and structure choices matter now more than ever
✅ Forward-thinking owners can turn this challenge into an opportunity
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