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    These 3 mistakes could cripple your next office lease negotiation

    Negotiation is an art, and making these mistakes could cost you big.

    Over 80% of healthcare practices lease their office space. The location and impression their office makes on patients is a huge determining factor in patient referrals and return visits, especially in a competitive market.

    Additionally, the cost of rent is typically a practice’s second-highest expense after payroll. For these reasons, it is imperative that practices achieve the best possible terms during new lease and renewal negotiations in order to maximize profitability. There are three common pitfalls many practices fall into when negotiating on their office space.

    Lack of market knowledge

    To achieve the best possible terms, you must be familiar with all options that exist in your area. This market knowledge includes available vacancies, recently completed transactions, and future spaces that may be coming available soon. This is critical information that a local commercial real estate professional can provide to you at no charge. It would be extremely difficult for a healthcare provider, an attorney, or an out-of-town “lease negotiator” to know this information as it is not public record, and many available spaces are not listed on online databases.

    Related article: How to assemble the right team to open a new office

    Knowing about other properties that may be more appealing or offer better value will help you find the best space and ensure you are not over-paying.Dental office

    Unawareness of less-common business points in a lease

    Most healthcare professionals are familiar with the rental rate, length of term, and build out allowance provided by the landlord. Beyond these, there are many other important concessions available, such as free or reduced rent periods, the right to transfer the lease to another practice owner in the future, options to renew the lease after the original term expires, death and disability termination options, exclusive uses and more.

    There are also landlord-friendly clauses such as relocation provisions, unusual expense pass-throughs, and electrical or mechanical requirements designed for general, non-healthcare users that can impair a practice’s ability to operate.

    Related article: Be a real estate winner

    Failing to create a strong posture

    The key to an effective negotiation posture is making the landlord understand that you have multiple options on the table and are willing to pursue those options. One of the first questions a landlord will ask its broker is whether the tenant has professional representation. If the answer is no, they will ask if the tenant appears to know the market and is educated on the business points they are seeking.

    Carr Healthcare Realty
    Carr Healthcare Realty is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every ...


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