By Nathan Matelich, CCIM
It’s an exciting, and a little intimidating, step to open your own physical therapy clinic. However, there’s a dark truth that many people prefer not to discuss. Regardless of your expertise in patient care, your business will struggle if you choose the wrong location. I am a commercial real estate agent, and I have had people come to me after the damage has already been done. They get into the wrong space and their finances, referrals, and energy are drained, but they recognize the mistake, and we help them turn it around.
One of the smartest moves you can make is working with a commercial real estate agent who specializes in office and retail properties. The right agent isn’t just someone who opens doors for you. They’re a guide, an advocate, and a negotiator who can save you thousands of dollars while helping you create a space where patients actually want to walk in the door. Growth, when the real estate is on point, seems almost effortless.
As a top-producing commercial real estate broker with over $200 million in sales and co-owner of Coldwell Banker Commercial CBS in Billings, Montana, I have helped numerous business owners and healthcare professionals find the perfect retail or office locations to grow their practices. I “wrote the book” on commercial real estate that was an Amazon #1 Best Seller: Unknown to Unstoppable: A Commercial Real Estate Broker’s Guide to Dominating Your Market and specialize in guiding clients through site selection, lease negotiation, and building long-term wealth through commercial real estate. While I could bore you with more credentials, I’d rather take you on a PT’s journey to find her perfect location.
Let’s take a look at how Courtney James, owner of Heart & Soul Therapy in Billings, Montana, came to me before making a hasty decision.
1. Hire a Commercial Real Estate Agent Who Knows Office and Retail
Courtney had a dream of owning her own physical therapy practice that specialized in pediatric PT and pelvic health PT. What she really wanted was a great big commercial property that she could have custom-built to meet the needs of her patients. The banks, however, were hesitant to lend her more than $1 million to build her dream facility as a new small business owner, so she came to me and asked for help finding the right space to lease.
When looking for a space like this, it’s not the time to call your cousin who dabbles in selling houses. Residential agents are great at what they do, but leasing or buying commercial space is a whole different animal. You want someone who eats, sleeps, and breathes commercial real estate.
Look for designations like CCIM (Certified Commercial Investment Member) or SIOR (Society of Industrial and Office Realtors). These certifications aren’t just alphabet soup; they aren’t designations you can purchase from an online board. They mean your agent has been thoroughly tested, trained, and proven in complex commercial deals.
A skilled commercial agent will:
· Educate you on local market rents and vacancy rates.
· Show you multiple options so you can compare.
· Negotiate fiercely on your behalf.
· Help you avoid the “rookie mistakes” that sink new businesses.
ProTip: Find that specialist. You wouldn’t take your child to a family practice doctor to have heart surgery; you’d go to a pediatric cardiologist.
2. Choose the Right Location: Exposure, Layout, and Rent
You can be the best PT in the world, but if nobody can find you or your space feels like a maze, patients will drift elsewhere.
Retail Exposure Matters
Courtney wanted to be on the West End of Billings, in a highly visible location along 24th Street West. Finding that space ended up being the best advertising she’ll ever have. A location with strong signage and drive-by traffic can save you thousands of dollars in marketing costs. Every time someone drives by, they’re reminded that you exist. Compare that to a tucked-away office park where people drive in circles trying to find you (and leave frustrated, and you have an hour left unfilled because of a blown appointment).
Layout Drives Profitability
A well-designed layout makes your practice efficient. Patients should flow naturally from the reception area to the treatment rooms and then to the checkout area. If they’re bumping into each other or waiting in cramped corners, that’s wasted time, wasted space, and ultimately wasted revenue.
Don’t Overextend on Rent
This one is critical. A good rule of thumb is to keep rent around 5% of gross income, with 10% as the maximum. Paying more than that? Your space is now working against you, not for you.
Landlords set rents based on their mortgage, not your business model; a fancy new building with high rent will crush your margins.
Pro Tip: Hire a commercial agent who has seen hundreds of layouts. They’ll know what works and what doesn’t long before you sign a lease.
3. Negotiate Your Lease: Everything Is on the Table
Every lease term is negotiable. Landlords actually expect it. The worst thing you can do is walk in and accept the first number they throw at you.
A few common strategies:
· Free Rent: For every year of lease you sign, landlords might give you one month of free rent. Example: $3,000/month lease × 3 years = 3 months of free rent, worth $9,000.
· Tenant Improvement (TI) Allowance: Instead of receiving free rent, you may request that the landlord fund the construction. Using the same example, you could ask for $9,000 in TI money to help remodel your space.
· Turnkey Build-Out: Sometimes you agree to pay full asking rent, but the landlord delivers a finished, ready-to-use office. This is especially helpful if you don’t want to manage construction headaches.
A seasoned commercial broker will know what’s realistic in your market. Decide what’s most important to you: upfront savings, long-term rent relief, or move-in ready space.
Courtney and I found a great building that was offices in front and a garage space in the back. We offered the full asking price and a long-term lease in exchange for the landlord’s contribution toward the build-out expenses.
ProTip: If your agent doesn’t ask, the answer is always “no.” I always say that “closed mouths don’t get fed!”
4. Do Your Homework on Demographics and Competition
Demographics and competition analysis matter because, even if you have the best space in the world, being in the wrong neighborhood can lead to struggles.
Ask yourself:
· Who are your ideal patients? Older adults recovering from surgery? Athletes? Families?
· Where do they live, work, and shop? Your clinic should be conveniently located for them.
· How much competition is nearby? Opening right next to three other PT clinics might not be wise unless you have a niche they don’t serve.
There are two well-established PT clinics in the area where Courtney wanted to open her doors. Superior visibility (roughly 4 times the drive-by traffic) meant she had a competitive advantage. Your commercial agent should provide data on traffic counts, nearby businesses, and neighborhood demographics. These numbers are clues to whether your clinic will grow quickly or fight an uphill battle.
ProTip: Choose an area of town that has the best demographics for your ideal patient, then choose a space with superior visibility (compared to competition).
5. Plan for Growth and Your Exit Strategy
Too many clinics pick a space that’s perfect on day one… and overcrowded by year three. Patients feel crammed, staff are stressed, and moving becomes an expensive distraction.
When choosing a location, think five to seven years ahead:
· Does the building have extra square footage you could expand into?
· Will the landlord allow you to sublease if you outgrow the space?
· Is there parking capacity for future growth?
About a year after moving into her location, Courtney’s business was doing great. The owner of the neighboring unit approached her and asked if she wanted to purchase his location to expand into. Since things were already established and growing, it was an easy decision that didn’t require a move.
However, if things don’t go as planned, you don’t want to be stuck. Ask your broker about early termination options, renewal rights, and subleasing clauses.
· Don’t rush. It’s better to wait a few extra months for the right space than to commit to a bad lease for five years.
· Trust your gut. If something feels off about a landlord, trust your instinct. Relationships matter.
· Remember your “why.” The point of your practice is to help people heal. The right space will allow you to focus on patients instead of stressing over bills.
Pro Tip: When you’re just starting out, rent small; as you grow, rent bigger. Finally, when the business is stable, consider purchasing real estate that will ultimately provide cash flow even after you retire and the company is sold.
Remember the Five Steps
Set yourself up for success with the right location. It’s not just about square footage; the right commercial real estate agent will help you secure visibility, negotiate favorable terms, and protect your financial health, allowing you to focus on the health of your patients.
Remember the five steps:
1. Hire a commercial agent with CCIM or SIOR credentials.
2. Select a location with good visibility, a smart layout, and manageable rent.
3. Negotiate lease terms creatively — everything is on the table.
4. Study demographics and competition before committing.
5. Plan for growth and build in an exit strategy.
Give your practice the best chance to survive. Because at the end of the day, you want your business to be unstoppable, where you’re not working yourself to death to pay your monthly lease payment.
A Quick Laugh Before You Go
A physical therapist walks into a landlord’s office.
Landlord says, “The rent is $4,000 a month.”
The PT replies, “How about $2,000?”
Landlord: “That’s a stretch.”
PT: “Good thing stretching is what I do best.”
ProTip: Don’t actually try that line in the actual negotiation!
