Your lease is up for renewal in eighteen months. You’re also thinking, quietly, about what your practice transition looks like in three to five years. These two facts are connected, whether or not you’ve mapped it out.
A veterinary practice real estate strategy is rarely the first thing owners plan for with the end in mind. But the building your practice occupies, whether you own it, lease it, or you’re weighing a sale-leaseback, shapes your economics and how a future buyer will value your practice. With rates and lease structures shifting in 2026, it’s a good year to revisit that decision.
Why veterinary practice real estate strategy matters
Real estate is one of the largest fixed investments behind a veterinary practice, according to AVMA data. Most owners, 54.9 percent, hold their practice in one legal entity and the land and building in a separate one. Another 24.7 percent own the practice but not the real estate, and 19.3 percent combine practice, land, and building into a single entity.
That split matters. Separating real estate from the operating practice creates clarity for a future transition: the practice changes hands under a clean lease, while the building stays a distinct, appreciating asset you hold or sell on your own timeline.
Reading today’s interest-rate environment
The Federal Reserve’s July 2026 Monetary Policy Report says the FOMC has held the federal funds target range at 3.5 to 3.75 percent since the beginning of the year, according to Federal Reserve data. That is well above the near-zero years many owners financed their first building in.
This changes the buy math. SBA 504 financing for owner-occupied real estate runs near the low 6 percent range, SBA 7(a) loans run considerably higher, and conventional commercial mortgages span a wide band by credit profile and property type. None of this makes buying wrong. It means modeling the buy scenario against today’s real cost of capital, not years past, especially as interest rates keep shaping the transition landscape ahead of your transition window.
NNN leases, gross leases, and TI allowances
If leasing is your path, the lease structure matters as much as the rent number. A true triple net, or NNN, lease means you pay property taxes, insurance, and maintenance on top of rent and utilities. A gross lease folds more of those costs into one landlord-absorbed number. Landlords typically target a 6 to 10 percent annual return plus equity built as principal is paid down, and a longer-term NNN lease often carries lower base rent, supporting your practice’s profit line, per dvm360 analysis.
Before signing, confirm: who covers major systems (roof, HVAC, structure), how the rent escalation clause is calculated, whether renewal options exist, and whether the lease is assignable to a future buyer without landlord discretion.
A tenant improvement, or TI, allowance is the landlord’s contribution toward your buildout. Benchmarks for medical-style space vary widely by market, building condition, and lease length, so treat any figure offered as a starting point, not a fixed quote. A stronger TI package tied to a longer term, paired with clean assignability language, becomes a real asset at transition time rather than an undocumented line item.
What buyers actually prefer
Buyer preference splits by type. Independent doctor-buyers often value eventually owning their building rather than staying in a lease they can never buy. Larger buyers generally keep cash focused on the practice itself and favor a clean, long-term, assignable lease over taking on real estate. Facility condition influences both groups, part of why strategic facility design pays off well before a transition begins. The same principle applies to the property documents. Real estate terms are another reason planning your transition early matters, because lease language can narrow or widen your buyer pool.
The takeaway
There isn’t a single right answer between leasing, buying, or a REIT-style sale-leaseback. The right choice depends on your timeline, the buyer type you expect, and today’s cost of capital, not the rate environment of years past. Coordinating real estate decisions with vet practice sales advisors can keep lease terms, financing, and transition timing aligned before buyer diligence starts.
Where does your real estate sit today, and does that position help or hinder the transition you’re building toward? We’ve walked owners through this kind of analysis, weighing lease terms, financing, and timing together. When you’re ready, let’s look at yours.