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Charles Feitel

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part IV)

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part IV)

6/9/2019 4:57:37 AM   |   Comments: 0   |   Views: 22

Go for A Shorter Lease Term

 Sometimes, landlords are desperate to rent space and may try to talk you into agreeing to a lease with a longer term.

For new practitioners, a one-year lease with a renewal clause is best. But if your landlord won't take a one-year contract and you really want the space, go for a two-year.

Try not to agree to a lease with a more extended period unless you get concessions in return, like free rent or a build-out paid by the landlord.

The longer the lease period, the more you limit the possibilities for your practice if you outgrow your space. And with a longer lease, you'll be out of luck if you need to change locations. 

Protect Yourself with Clauses

 There are three kinds of commercial lease clauses that offer protection for medical practitioners. They're the same sort of clauses property owners hope you never know how to negotiate for.

Sublease Clause

 What would you do if, due to unforeseen circumstances, you wouldn't be able to practice from where you are and needed to sublease? If you didn't add a clause to your contract giving you the right to do so, you wouldn't be able to do much.

A sublease clause gives you the legal right to sublet your space to somebody else. Even if you don't think that this will ever happen to you, it's best to add one.

You never know what the future holds!

When you sublease, you have somebody else practice in your space under your lease terms. You pay the lease, and the other practitioner pays you a portion of the costs.

If you think it's a good idea to have the option to sublet, ask your tenant rep negotiate for a sublease agreement.

Exclusivity Clause

 If you successfully negotiated for an exclusivity clause in your lease, your landlord won't be able to rent space in buildings he owns to direct competitors within an agreed upon distance from your practice.

Most often only anchor tenants, or those businesses so prominent or well-known that they draw in lots more business than the average tenant, can get an exclusivity clause inserted into their contract.

But it doesn't hurt to ask. Especially if you have a lot of square footage and pay a lot of rent. Anyway, most landlords won't want to lease to tenants who'll end up cannibalizing each other's business.

If you don't have an exclusivity clause, signing a shorter-term lease with options to renew is the best way to protect yourself should direct competitors encroach on your turf. This gives you have the choice of moving out before it's too late.

Co-tenancy Clause

 Sometimes, space becomes desirable because there's an anchor tenant who brings lots of foot traffic into the building.

You move in because you like a lot of eyeballs passing by your storefront. If this is you, ask to include a co-tenancy clause that allows you to break your lease if the anchor tenant moves out and isn't replaced by another one.

You might have factored in the positive effect that the anchor tenant would have on your business. And with the anchor tenant out of the picture, the impact you counted on won't happen.

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