3 Pitfalls in Leasing Medical Space

All Providers can agree that medical space is more expensive and it’s impacting the practice bottom line! Typically, commercial real estate is the second highest expense for the practice but one that may be negotiable.

A properly negotiated transaction could significantly benefit a practice by tens to hundreds of thousands of dollars over the course of a lease term.

Here are key potential pitfalls to avoid to ensure maximum profitability.

1 No Leverage with your Landlord

One potential misstep is allowing the Landlord to think that their property is only option being considered: You may not really get their best deal terms.

You need owners to compete to attract (or retain) you as a Tenant. The most efficient way is by engaging a market expert who specializes in supporting Physicians and practices in negotiating with ownership groups. Before securing the next long-term lease renewal it is beneficial to understand terms from other competitive properties.

2 Wrong timing

When it’s too early Owners are not likely motivated to lock in. Conversely if you’re late you could lose the opportunity to evaluate options. Landlords realize that it takes significant time to plan and complete construction for a relocation. With months remaining before the lease expiration you may be limited with terms offered.

The best timeline would be from 12 to 18 months before the lease expiration. It can be potentially longer if a purchase or new development is being considered. Do pay critical attention to specific timelines and notice dates stated in your lease. If you miss a key notice date it could nullify your right or opportunity to renew.

3 Don’t go solo

With the significant number of institutional or REIT owned properties it’s likely there are sophisticated ownership groups or representatives to help navigate lease negotiations.  Physicians or administrators often do not have specific training or commercial real estate market knowledge to best advocate. Don’t allow owners a distinct advantage at the outset.

What you can you is engage a professional with health care expertise to help maximize profitability and tilt negotiations your way.

The largest companies and health systems use professional real estate representation to navigate transactions and ultimately secure the most favorable terms possible on their behalf.