A commercial lease renewal option is always a good card to have in hand. It gives medical tenants an opportunity to consider where their business stands, and how well the terms of their current rent agreement reflect the current market, and the power to negotiate accordingly. Remember, a lease renewal option is a starting point – it’s not carved in stone. It’s up to you to make it work in your favor.
Here’s what to know when renewing the lease on your healthcare practice.
Be Proactive
The lease on your medical practice is one of the major costs of doing business. Educate yourself on the key points of your lease so that you understand what they mean to your bottom line going forward. Keep an eye on market trends to stay abreast of current rates, terms, or even opportunities. And always approach your landlord well ahead of the renewal deadline so that you have time to make your case.
Know Your Position
Landlords want tenants to stay in place as long as possible. When a tenant renews their lease, the landlord doesn’t have to worry about lost rental income, the cost of a build-out, or marketing costs. Understanding the dollar value that your space brings to your landlord’s portfolio allows you to negotiate in your favor.
Ask for Updates
Commercial leases are long-term, and your business needs have likely changed since you signed on. This is especially true over the past year, where practices have had to course-correct to account for new recommendations in care, social distancing, and PPE. As part of your lease renewal negotiation, identify and ask your landlord to contribute to updates that will help you work more safely and efficiently.
Identify Alternatives
As part of your market research, identify other spaces that might work for your business. Talk to potential landlords about costs, terms, or amenities to see whether moving your practice is worth considering. Even if you decide to stay, you can use this information as leverage when negotiating your lease renewal at your current practice address.
Always Negotiate
Never give your landlord the impression that you’ll simply sign on again with the current terms. If they assume renewal is guaranteed, the contract terms are more likely to be skewed in their favor. Come to the table with requests and suggestions informed by your practice needs and the current market position.
Partner with a Broker
Running a healthcare practice is a challenging and all-consuming occupation that often doesn’t leave time for research into the local real estate market or commercial contracts. If you are not familiar with the market or with negotiating a lease, secure the services of a specialist who can negotiate in your favor.
At GZ Realty, we’ve spent decades serving medical practices. As experts in medical office space, we understand the market, practice special needs, and how to structure a lease renewal that works in your favor. If your lease is coming up for renewal and you need some guidance on how to proceed, get in touch!