A well-crafted lease will allow your practice to thrive.
Knowing it’s time to negotiate or renegotiate your dental office lease can feel like an impending cloud of doom, but there’s no reason to dread the process. This is an opportunity to turn the negotiation tables in your favor. Here are three simple tips to navigate a dental office lease renewal negotiation, and come out on top.
1. Get a head start on your renewal:
By leaving your lease renewal to the last minute, you give up your leverage to negotiate better terms. If you’re late to the party, the landlord will demand a lease that favors their interests (both financially and legally), knowing that they can simply terminate your tenancy and evict you.
Far more disconcerting is if you miss your lease renewal or expiry deadline entirely, putting you in the precarious position of being a month-to-month or “overholding” tenant. Your landlord can double your rent or evict you with 30 days’ notice to make room for a higher-paying tenant. We advise you to begin the lease renewal process at least 18-24 months before the deadline.
2. Review your current lease agreement and identify gaps and problem areas: Start by reviewing your existing lease, and familiarize yourself with the agreement. Think about your current position:
- Does the lease support your practice strategy and day-to-day functions, or is it impeding them?
- Does the lease provide you with the flexibility to grow, bring in associates, expand your services, or offer extended hours?
- Does the lease allow you to terminate the agreement in the event you become disabled and cannot work?
- Does the lease permit a smooth and profitable practice sale, or does it entitle the landlord to proceeds of that sale, or control over the transfer of the lease?
- Upon practice exit, will you be held financially responsible for gutting and renovating the space and restoring it to your landlord’s specifications (pre-dental office condition)?
Problematic clauses should be the first provisions addressed and revised when you begin renegotiating your terms.
3. Expect delays: Landlords do have their own agenda, and they are looking to maximize profits and minimize their accountability. They may try to stall or delay negotiations to purposely make you miss the renewal deadline. If you’re aware of this, you can anticipate these tactics and push hard for timelines to be met.
The surest way to end up with a favorable lease is to work with a skilled lease negotiator. They’ll take the guesswork out of the process, and after an initial assessment to understand your operations, needs, and goals, you can know your lease renewal is in expert hands.
Cirrus Consulting Group is part of the Forward by Henry Schein network. For more information, please visit www.forwardbyhenryschein.com.
This article was originally published in Sidekick Magazine.
About the Author: Alain Sabbah is a principal at Cirrus Consulting Group, a firm devoted to providing office lease negotiation and review services for dentists. Alain has extensive experience in commercial real estate consulting, focusing on dental tenant representation.