The vast majority of healthcare practice owners lease their space, with three-quarters saying they prefer leasing over buying. Leasing can be great for your bottom line: it frees up working capital so that you can reinvest in your business, and with a landlord watching over the building, essential maintenance is handled seamlessly. Additionally, leasing gives you flexibility should you want to move or expand your practice.
But with any lease comes that scary term: lease renewal. If your renewal period is coming up, here’s what you need to know:
Don’t Sign Without Negotiating
Commercial leases are different than residential leases, where what you see is what you get. Commercial leases tend to be longer term and outline various terms, conditions, and negotiable improvements. Whether you’re renewing an existing lease or signing a new one, don’t sign before you understand exactly why your agreement entails, how it compares to other spaces and concessions that an make the space work for you.
Know What You Can Negotiate
The specifics of what can be negotiated vary depending on the space, the landlord, and who is doing the negotiating, but line items that are often up for negotiation include:
- Gross lease
- Duration of the lease
- Free rent periods
- Annual increases
- New tenant concessions
- Repair and maintenance obligations
- Subletting options
- Fees and reimbursements
- Non-compete clauses
- Renewal options
- Termination clauses
- Guarantees
Don’t want a competing practice opening next door? Lease negotiation can stop that from happening. Want help with build-out so that you’re ready to provide high-quality medical services on day one? Your landlord may be open to contributing to or even covering property improvements. In a soft market? You may be able to negotiate a few months of free rent at the start of your term.
Hire an Agent
If you don’t have experience negotiating medical practice leases, you might not know exactly what’s up for negotiation – and to what degree it’s possible to negotiate. That’s where a specialty real estate agent comes in.
A knowledgeable medical real estate expert knows precisely what can be negotiated, how much leeway you have in the negotiation, and what extras you can ask for. Additionally, they’ll be able to tap into a deep knowledge of local market conditions and trends to help broker the best possible deal for you.
Good news: very often, a real estate expert’s services are covered by your landlord, meaning that you won’t be on the hook for associated expenses. Even if your contract stipulates that you’re responsible for costs, the money you’ll save by working with a professional can be well worth it.
Start Early!
The early bird “gets” the worm, which holds true for medical real estate lease negotiations. The earlier you start the process, the more time your agent will have to work through the negotiations, and the more money you’ll be able to keep in your pocket.
Don’t wait until the month before your lease renewal to begin combing over the fine print – start a year or more in advance. This is especially true if you want to move or sign a new lease. Finding the right property might take 6-9 months, and you don’t want to hastily agree to a first offer because you find yourself in a time crunch. If you want to renew a lease on your existing space, allow 120-150 days to finalize negotiations.
Let the Medical Real Estate Experts Negotiate for You: Talk to GZ!
Ready to negotiate a lease that works for your medical practice? Talk to the medical real estate experts at Gittleson Zuppas Medical Realty. Whether the goal is to negotiate better terms in your existing space or move to a new address, we can help ensure that your space and your lease meet your goals. Before you sign on that dotted line, contact GZ!