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A medical plaza in our town of Anthem, just north of Phoenix, has several vacancies. Some physicians approached the landlord and asked to share space. An orthopedist and a dermatologist wanted to operate two days a week. Their plan was to rent one office, switch off days, and reduce costs to patients.

The landlord refused.  He thought, why rent one office to two doctors when he could rent two offices instead. The problem with the landlord’s thinking was that neither doctor wanted to pay full rent for only two days. The landlord rejected other would-be tenants for the same reason.

Most medical specialists gather near hospitals.  The closest hospital in our case is 20 to 35 minutes away. While specialists will not relocate here, they will consider seeing patients one to two days a week.   

Furthermore, a general practitioner saw patients 4 days a week and asked the landlord about allowing another physician to use the office on the fifth day.  Because the landlord allowed no subletting, he rejected the request. The doctor moved down the street where he was allowed to sublet and the original landlord lost a renter.

The landlord seems to hold the perspective that doctors make a lot of money and don’t need to share space.  He believes that subletting leads to less office space rented. This decision has caused at least three additional vacancies with lost rent of over $100,000 a year. Perhaps others failed to rent for the same reasons.

Doctors feel the squeeze from lower payments from Medicare and insurance companies. They need to watch costs like the rest of us. Paying half rent for two days a week may work; paying full rent for two days a week will not.

The office rental market is weak. We have a high vacancy rate that includes new construction that has been empty for three years. We are in a buyers’ market, not a sellers’ market. A wise landlord will look for flexible, innovative ways to lure new tenants rather than ignoring easy rentals that could have reduced his vacancy numbers.

The property owner has maintained this attitude over the past three years, even in a declining market. The prophet Hosea wrote, “Since Israel is stubborn like a stubborn heifer, can the LORD now pasture them like a lamb in a large field?” (Hosea 4:6, NASB) When we dig in our heels, refuse to rethink positions, especially if those positions don’t work; we block the Lord from helping.  In my view, the stubborn position of this property owner has cost hundreds of thousands of dollars, an amount that will likely increase.

A key principle in business is this: when we reject opportunities, somebody else will snatch them. In this instance, an investor bought an empty building through a bankruptcy sale. The new owner was delighted to allow subleasing to allow medical practices to share space. Soon the building will be full while the other buildings will continue to struggle with recurring vacancies.

Steve Marr, Your Christian Business Coach

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