Lease vs. buy: office space for a first-time practice owner

What most people get wrong about this question

The lease-vs-buy debate is usually framed as a math problem: monthly lease payment vs. monthly mortgage payment plus opportunity cost on the down payment. That framing is too narrow.

The real question is what optionality you need over the next ten years — because once you sign either contract, the next decade of your practice moves with it.

The math matters. So do six other things people skip.

The lease case (clean version)

You lease when you need flexibility, when you do not yet know whether the practice will succeed in this location, or when capital is better deployed elsewhere.

Strengths:

Lower capital outlay at opening (no down payment of $200K to $1M+)
Easier to walk away if the practice fails or moves
No facility maintenance burden — burst pipes are someone else's problem
TI (tenant improvement) allowances of $50 to $120 per square foot in the DMV in 2026 — a real subsidy from the landlord
Faster setup — signed lease to keys in 30 to 60 days vs. 90 to 180 for a purchase

Weaknesses:

Rent escalators of 2 to 4% per year compound over 10 to 15 years
No equity built; rent is permanently expensed
Limited control over the building (parking, signage, hours, neighbors)
Lease renewals can be brutal — landlords know your switching cost is high
At year 10, you are starting from zero again

The buy case (clean version)

You buy when the location is right for the long term, when you have capital or strong financing, and when control matters more than flexibility.

Strengths:

Equity builds with each mortgage payment
Building appreciation (DMV commercial medical has appreciated 3 to 6% annually over the last decade, varying by submarket)
Full control of the space — signage, hours, layout changes, future additions
Mortgage payments are largely predictable; rent is not
At year 10, you own an asset worth more than you paid

Weaknesses:

Large capital commitment (typically 20 to 30% down on commercial property in the DMV, often more for first-time medical buyers)
Facility maintenance becomes your responsibility — HVAC, roof, parking, landscaping
Slower to exit; selling commercial medical real estate takes 6 to 18 months
Concentration risk: if the practice fails, you own a vacant medical building (specialty buildings are harder to repurpose)
DMV-specific permitting complexity for medical property purchases — DC and Montgomery County add review steps that retail or office purchases skip

The math, made honest

For a first-time practice owner considering a 2,500-square-foot space in the DMV in 2026, the rough comparison looks like:

Lease scenario:

$35 to $55 per square foot annual rent, NNN (net of taxes, insurance, maintenance — you still pay these on top)
Annual rent: $87,500 to $137,500 plus NNN expenses of $8 to $15 per square foot
TI allowance offsetting buildout: $125,000 to $300,000 toward the $200K to $500K buildout cost
Year-one out-of-pocket: roughly $100,000 to $180,000 total (buildout net of TI, plus first/last/security deposits)

Buy scenario:

Purchase price for a 2,500 sq ft medical condo: $750,000 to $1.5M
Down payment at 25%: $187,500 to $375,000
Mortgage at current rates on a 20-year commercial loan: $5,500 to $11,000 per month
Buildout: $200K to $500K (no TI allowance — you own it)
Year-one out-of-pocket: $400,000 to $900,000 total

The buy scenario costs roughly two to four times more in year one. But by year ten, the buyer has built equity, captured appreciation, and is no longer subject to rent escalators. The break-even typically lands between year seven and year nine, depending on appreciation assumptions.

Six factors that change the answer

The general math above is a starting point. The following factors regularly flip the decision:

1. Your specialty's geographic flexibility

A primary care practice can move three miles and keep most patients. A specialty practice with a referral network sometimes cannot. Specialties that cannot easily relocate have a stronger case to buy — they will be there long-term anyway.

2. Whether you are partnering or solo

Partnership-bought real estate gets complicated when partners exit. Solo ownership of practice real estate is straightforward; multi-partner ownership requires buy-sell agreements specifying what happens when a partner leaves. If you are not ready for that paperwork, lease.

3. The landlord's profile

A national REIT (real estate investment trust) as your landlord is different from a local family that has owned the building for 40 years. REITs are professional but inflexible; local owners are flexible but can sell to a REIT at any time. Ask who owns the building before signing the lease.

4. Your debt position

A practice loan plus a commercial mortgage plus equipment financing compounds quickly. If you already have $300K in student debt and $200K in practice startup debt, adding $1M in commercial real estate debt may be the load that breaks the practice in a downturn.

5. The exit you want in 15 years

Do you want to sell the practice and walk away, or sell the practice and retain the real estate as a retirement asset? Selling-to-a-buyer with the real estate included produces a higher multiple but a slower sale. Selling without real estate is cleaner but smaller. The exit you want should inform the entry you choose.

6. The state and jurisdiction

DC, Maryland, and Virginia treat commercial medical real estate very differently. Virginia has the lowest commercial property taxes of the three. Maryland and DC have higher tax rates but stronger appreciation in dense submarkets. The same practice in Tysons vs. Bethesda vs. Capitol Hill produces meaningfully different ten-year outcomes — even before the medicine.

The decision framework

For most first-time practice owners in the DMV, the rational starting point is:

Lease for the first 3 to 5 years. You learn whether the location works. You learn whether you want to run this practice for the next 20 years. You preserve capital for working capital, equipment, and marketing.
Reassess at the first lease renewal. If the practice is working, the location is right, and you have capital, this is the moment to consider buying. Often the same landlord will sell you the building you have been leasing.
Avoid buying for the wrong reason. "I want to own something" is not a reason. Tax benefits, controlled costs, and a future asset are reasons — and they must be modeled, not assumed.

The question worth asking

Find two physicians: one who leases, one who owns. Ask each, "If you were starting over, would you make the same choice?"

The lessees who would lease again describe flexibility they exercised. The owners who would buy again describe control they valued. Listen to which description sounds like the practice you want to build.

Drsops is launching in fall 2026 with verified peer reviews of medical contractors in the DMV. Join the waitlist to be among the first to use it.