Carr Healthcare Realty is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, hundreds of medical, dental, veterinary, and other healthcare practices trust Carr Healthcare Realty to help them achieve the most favorable terms on their lease and purchase negotiations. By not representing landlords or sellers, Carr Healthcare Realty is able to strongly advocate for healthcare providers and avoid conflicts of interest while saving their clients hundreds of thousands of dollars. Carr Healthcare Realty’s team of experts can assist with all types of real estate transactions, including lease renewals, expansions, relocations, startup offices, purchases, and practice transitions

Carr Healthcare Realty

	A commercial real estate transaction can either catapult or cripple your business. As one the highest expenses of healthcare practices, a real estate negotiation needs to be handled by an expert. One small mistake on a lease or purchase can cost hundreds of thousands of dollars.

	It is critical to have multiple options (whenever possible) so you don’t miss a good deal. Protect yourself and your business by identifying these five warning signs that you might be picking the wrong real estate agent.

	1. The agent only shows you one property at a time

	As a business owner, your time is extremely valuable. You should be looking at 

 and evaluating them simultaneously. This gives you leverage in your negotiations, back-up plans in the event your first choice doesn’t work out and a snapshot of the market in a competitive environment. Every landlord is different in their willingness to earn your business.

Related article: 3 ways to manage your second-highest expense

	2. The agent is on the flyer of the space you are looking at

You are entitled to representation. If the agent you’re working with has a listing agreement with the landlord, their fiduciary responsibility is to maximize that landlords profit. They cannot represent the landlord and adequately represent your interests as well. Avoid conflicts of interest by signing an agreement with an agent that specializes in buyer/tenant representation.

	3. The agent is asking questions about your business that are obvious to anyone who knows your industry

	Questions like, “What do you want to offer? How long of a term do you want? And how long does your construction typically take?” These are red flags that demonstrates that they do not know your industry or the needs of your business.

	Medical and dental offices have specific electrical and mechanical needs that need to be addressed up front or they could be very costly.

Related article: Why a broker may be beneficial for your next dental office lease negotiation

	It’s also important to remember that if they don’t understand your business and industry, they can’t sell the landlord on your value as a tenant.

	4. Reputable professionals in your industry can’t vouch for their experience

	Building a dental or medical practice is a collaborative process between your equipment specialist, contractor, architect, lender and real estate agent. If your agent is not in sync with those professionals, it can turn your project into a nightmare.

	5. The agent has listings in your desired market

	If the agent has listings in the market you are looking in, they have a conflict of interest in representing you as a tenant or buyer and should be eliminated as an option to represent you. That agent is financially incentivized to push you toward their listings. Also, they have existing working relationships with landlords in your market. If negotiations get tough, is your agent’s loyalty with the landlord or you? You might miss the ideal property because it is listed by your agent’s biggest competitor.

Related article: How to time your next dental real estate transaction

	Just like medical professionals specialize, so do real estate agents. You wouldn’t refer an endodontist to give your patient braces. The real estate agent who handles your transaction will impact the trajectory of your business for the next 20 years in either a negative or positive way. Choose wisely!

Articles

Real estate is a huge investment, so why would you trust an amateur to help you out?

5 signs your real estate agent isn't good enough

	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.

 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.

	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.

	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

	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.

	In a renewal situation, they will ask if the tenant is seriously willing to leave. If the landlord and its broker sense any weakness in the posture created by the tenant, they will not offer terms that are truly competitive to the tenant. Many landlords also see it as a weakness if a consultant or out-of-state attorney is handling the negotiation for the tenant because there is no local market knowledge. The same is true when tenants attempt to represent themselves.

	It is also crucial to the posture to begin the negotiations at the proper time - ideally one year before the current lease expires. If there is insufficient time to plan and buildout a space, then the landlord will know the tenant’s options are limited, weakening the posture. Strong posture causes the negotiation to be more favorable than merely bartering with a landlord.

Related article: How to time your next dental real estate transaction

	Leveraging a local real estate professional’s expertise and then dictating favorable terms to a landlord yields consistently more favorable terms to a tenant than simply asking for a price and then asking for a lower price.

	Strong posture is not about bluffing or threatening. Having multiple legitimate options and a credible willingness to choose the other property creates an environment where landlords compete to attract or retain quality tenants, and ensures they get competitive terms. Expert representation by a real estate professional is available at no cost to tenants, because their services are paid for by the landlord or seller as part of the listing agreement with the landlord’s broker.

	The current commercial real estate market has fully recovered, and it is more important than ever to be prepared during lease negotiations. Avoiding these pitfalls will help tenants achieve more favorable terms for their practice and their bottom line.

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

These 3 mistakes could cripple your next office lease negotiation

	When it comes to managing expenses in your practice, there are dozens of categories to evaluate: equipment, technology, loan costs and interest rates, sundries, marketing, and on and on they go.

	Many practice owners are quick to shop-out what they believe are the most obvious expenses, but few understand the impact of one of the largest expenses and how it can be dramatically reduced to increase profitability. The highest expense for most practices is payroll, followed by real estate.

	Real estate encompasses your monthly rent or mortgage payments, along with the property’s operating expenses, maintenance fees, utilities and janitorial costs. If you consider these top two expenses, payroll and real estate, only one of them is really negotiable.

	With payroll, you can either pay people their value or they usually find another job that will. You may decide that you can cut staff, but if you need people you need to pay them what they deserve or they will eventually leave.

	Real estate however, is 100% negotiable. You have the choice of leasing or owning, as well as being in an office building, retail center, a stand-alone building, or large medical complex with many other providers. You can choose the size of your space, the design and the landlord you want to work with - or to be your own landlord.

	And if you do own, you get to decide whether to buy an existing building, an office condo, or to develop your own building from the ground-up. When negotiating the economic terms of a lease, you get to have a say in the length of lease, the desired concessions including build out period, tenant improvement allowance, free rent, lease rates, annual rate increases and many other provisions.

Related article: 5 important things to know when renewing your dental office lease

	With this many choices to evaluate - understanding that each one affects the final economic outcome - why is it that so many practices fail to capitalize on their real estate opportunities? The short answer is that most practice owners and administrators simply don’t have the knowledge and expertise in commercial real estate to understand how to make the most of these opportunities. They view real estate as a necessary evil instead of an incredible opportunity to improve profitability, reduce expenses and improve the quality of their patients’ experience. When the correct approach is taken, you may actually look forward to it instead of dreading your real estate negotiation.

	Up next: Three key ideas that will help you make the most of your next real estate transaction.

	Every type of transaction has an ideal timeframe to start the process. When starting too early or too late, you communicate to the landlord or seller that you don’t really know what you’re doing. When that message is communicated, it hurts your ability to receive the best possible terms.

	For example, don’t wait for your landlord to approach you on a lease renewal negotiation. Start by consulting with a professional so you can understand the ideal timeframe to start your transaction, come up with a specific game plan for what you want to achieve, and then you be the one to approach your landlord with renewal terms.

	Landlords and sellers prey on unrepresented tenants who don’t really know the market or what their options are. If the tenant was a Fortune 500 company, the landlord would approach them with a high level of respect, expecting that they either have a real estate broker hired to represent them or have a team of professionals internally that are well equipped to handle the transaction.

	In contrast, when a landlord or seller starts speaking with a tenant who isn’t represented, and who they don’t believe knows the market as well as they do, that tenant is not going to get the same level of respect through the process. This is because the landlord senses an opportunity to take advantage of a small tenant who is not an expert, doesn’t have a full complement of real estate knowledge and skills, and who doesn’t have adequate representation.

Related article: Five myths your landlord wants you to believe

	When you understand that commissions are paid in commercial real estate just like they are in residential real estate-they are set aside in advance for two parties, not just one-then you understand there aren’t any savings by not having a broker. And if there aren’t any savings by not having a broker, then showing up without one only further detracts from your credibility.

	It is nearly impossible to emerge victorious from a negotiation without leverage and posture which are created by having multiple options in the market. If you limit yourself to one property, you are at the mercy of that owner. Since most landlords and sellers negotiate professionally, it is easy for them to know when you don’t have other viable options.

	Simply telling a landlord that you have a proposal from another landlord won’t give you a strong enough posture. Most landlords look at unrepresented tenants and assume they do not know the market, do not understand all their options, and are not really serious about making the landlord compete for their business.

	Leverage and posture are created when you have the right timing, professional representation, an understanding of all your available options and a detailed game plan of what you want to accomplish in order to capitalize on the market.

	These three key ideas are the first of many factors that allow healthcare tenants and buyers to reduce their second highest expense - which dramatically impacts profitability and cash flow.

If you're looking to make your practice more profitable (who isn't?), start with your biggest expenses.

3 ways to manage your second-highest expense

	One of the most significant business decisions you will make is the strategic choice of your office’s location. In many markets, the incentives offered by landlords to new tenants make relocation more appealing than renewing a lease in your existing space, and before signing any lease renewal you should evaluate all the options in your area.

	If you decide to open a new office, whether as a relocation, new start-up practice, property purchase, or second office, having the right team in place is paramount and can make the process successful, profitable, and maybe even fun! The unique office needs of healthcare providers are foreign to most real estate brokers, architects, and other service providers. Experienced professionals with a healthcare focus provide the expertise needed to address issues such as patient flow, privacy and compliance, medical technology integration, parking and accessibility requirements, and aesthetics. When choosing your team, seek out experienced, healthcare-focused professionals to fill each role and you will end up with an office that will serve you and your patients for years to come.

	Here are some guidelines and ideas for putting your team together to help you find the best possible location and terms, keep your costs low, and create an ideal office to meet your patients’ needs.

Trending article: How to time your next real estate transaction

	The real estate agent helps to make sure the entire new office process goes smoothly, and is one of the first roles you will need to identify and fill. Your agent should provide guidance in choosing the best location, negotiate the most competitive rates and terms with the landlord or seller, and assist in assembling the rest of the team. He or she will be able to advise you on current market conditions, vacancies, costs to open a new office, and help you avoid common pitfalls in choosing a suitable space.

	Should you choose to lease an office, your agent’s experience in representing healthcare tenants can also help you achieve concessions that landlords only make available to the highest quality tenants. If the agent is well-connected within the healthcare community, he or she can also introduce you to the other players you will need on your team and help them all to work together on your behalf. Your agent’s services are typically paid for by the landlord or seller, so there is usually no out of pocket cost to you.

Trending article: 5 myths your landlord wants you to believe

	A real estate attorney plays a critical role to ensure that all the legal terms of the lease or purchase are drafted to protect your interests in the short term and long term. Choosing an attorney who specializes in real estate transactions will help the legal negotiations with the landlord or seller to move faster and thereby reduce legal fees.

	An experienced, healthcare-specific architect is the key to transforming your new space into your ideal office. He or she will meet with you, your equipment and technology providers, and building engineers and determine the best way to achieve your design ideas while completing your new office. The architect is responsible for the overall design, obtaining permits and complying with building codes, and is also in charge of coordinating the work of the engineers, contractors and suppliers. Through constant oversight and communication with the whole team, the architect holds everyone accountable to meet deadlines and makes sure your space is done on time, on budget, and will meet your functional and aesthetic requirements.

	Many office projects will require financing for additional build-out, equipment and furniture, and operating capital, and it is essential to bring in a practice lending specialist. Many major banks now have special departments who exclusively deal with commercial loans for healthcare providers and are able to provide rates and terms not available to other customers. The lender will be closely involved with the agent and the attorney to ensure that the requirements of the underwriters are included in the terms of the lease or sale, and will help to determine the size and quality of office that you can afford.

Trending article: Why a broker may be beneficial for your next dental office lease negotiation

	If your new office will require new equipment or technologies, your providers will meet with the real estate agent and architect early in the process to ensure that the design can accommodate the new equipment and they will coordinate delivery and installation within the proper timeframe set by the architect. The terms you negotiate during the lease or purchase combined with the loan package you receive will usually determine the amount you can invest in your new office’s initial equipment, so it is very helpful for these providers to work with your lender and real estate agent early in the process as well.

Trending article: How to take charge of your software implementation

	Your architect will be able to recommend several general contractors with a good track record for their quality of service. The contractor has the task of building what was designed-within the budget and on time. Your architect will recommend whether it makes the most sense to hire a general contractor on a negotiated basis, or to competitively bid the project to multiple contractors. In either scenario, costs, communication, and service are key determinants in choosing the right contractor.

	When you assemble your team, you want to ensure that everyone is an expert in his or her specialty and collaboratively works together with the goal of making the process go as smoothly as possible. Having the right team causes the project to be on time and on budget and of the highest quality. Equally as important, having the right team protects your time and frees you to focus on your practice and enjoy your new office. 

To ensure success when opening a new office, keep these six things in mind.

How to assemble the right team to open a new office

	Every commercial real estate transaction has an ideal time frame to begin the process. Most health care professionals understand that starting a new office or relocating an office doesn’t happen overnight, but the majority of professionals are not aware of the ideal time frames for each type of transaction. Different types of problems arise when starting a transaction too early or too late, and both need to be avoided.

	If you start the process too early, it creates a scenario where you spend your valuable time looking at properties and evaluating options, working with lenders and other members of your team, only to find out the landlords or sellers won’t negotiate with you yet. Many landlords and sellers won’t take their spaces off the market for extended periods of time while waiting for the tenant or buyer to be ready to transact because there is too much time before the transaction will actually take place.

	Or if they do negotiate, they won’t be willing to offer you even close to their best terms since they are going to lose income on holding a space vacant for an extended period of time. On the other hand, if they will put forth reasonable terms, it is predicated upon you moving forward immediately, which can leave you stuck paying for a space you can’t occupy for a period of time or paying unnecessary rent on your former space if you leave early.

	When starting a transaction too late, an entirely new set of problems arises. To start, most people underestimate how long a commercial lease or purchase transaction takes. They imagine it is similar to buying a home or leasing an apartment, which unfortunately is not the same as a commercial transaction timeline.

Trending article: 5 important things to know when renewing your dental office lease

	Simply identifying the top options and then negotiating a mutually agreeable deal can take several months.The legal process of reviewing contracts and finalizing details with lenders, architects, contractors, and equipment and technology providers comes next; this portion can also take months.

	This is followed by the build-out process if renovations are required. While you can build out a new space in six to 10 weeks depending on the size and scope of the project, you first have to design the space, then get construction documents and engineered plans created, and then submit for and receive permits to start the build out. After construction, you need to leave time for installing furniture, fixtures, equipment and technology, final permitting and approvals, while also leaving room for uncontrollable delays and change orders.

	If you are relocating from a previous office and you don’t vacate your former space prior to the lease expiring, you’ll likely pay between 125 to 200 percent of your last month’s rent based on a provision found in most leases called “holdover.” This allows the landlord to charge you a higher month-to-month lease rate as a penalty for not vacating or signing a new lease.

	If you only had two choices, starting too early is definitely better than starting too late, but it is by no means your top option. Fortunately, there is an ideal time frame to start each type of transaction and you don’t have to choose between the lesser of two mistakes. You can set yourself up for success by understanding the requirements of each type of transaction and how long each process takes.

More from the author: Why a broker may be beneficial for your next dental office lease negotiation

	Although there are many additional details needed to ensure that each type of transaction is handled properly, let’s start with the correct timing for the primary types of transactions that health care professionals will engage in:

		Startup or new office: 10 to 12 months in advance

		Purchasing an existing building or condo: 10 to 12 months in advance

		Buying land to develop a new building: 18 to 24 months in advance

		Buying a practice and getting a new lease or purchasing the building: 60 to 90 days in advance

	Every type of transaction starts with a specific approach and detailed game plan that is aimed at maximizing the opportunity. Getting the best possible deal and terms is extremely important, but so is making sure you don’t waste valuable time that could have spent in your practice. If you lose the equivalent of 20 to 30 hours of your time-which is what an average commercial real estate transaction requires to be handled properly-how much money would that cost you in lost production?

	Equally as important as saving time and money is avoiding costly mistakes that people make all too often when they don’t understand the nuances of health care real estate. The old adage, “If I knew then what I know now…,” can easily be avoided by hiring licensed professionals who specialize in real estate for health care practices. The reason patients come to see you is because you are trained in a specific skill set that that they require and that few people have. The same is true for real estate professionals who can help you identify your top options, negotiate the most favorable terms, save you a substantial amount of time and avoid common pitfalls.

	The first step to maximizing any commercial real estate transaction is simple: start the process at the right time.
	 

Set yourself up for success by understanding how long different transactions may take. 

How to time your next dental real estate transaction

	The current commercial real estate market has been dramatically affected by the economy in the past several years. This has resulted in a very favorable environment for tenants, as landlords are extremely motivated to attract new tenants and retain existing ones-especially high-quality tenants such as health care practices. Some of the current opportunities include reducing your monthly rent payment, upgrading your office’s appearance through an improvement allowance, and obtaining free rent and other favorable concessions.

	One of the keys to a successful negotiation is to take advantage of the free services of a real estate broker or agent. This is important because most landlords are in the business of real estate and typically have the upper hand when negotiating with tenants directly. Additionally, the majority of landlords hire a real estate broker to represent their interests and provide expertise. Though dramatic concessions are available, a specific posture and negotiation strategy are paramount to achieving the best possible terms.

Trending article: Why having a good credit score can boost your dental career 

	When the time comes to evaluate your current lease situation, you’ll need to consider the pros and cons of renewing the lease in your current location versus relocating to a new property. Since economics and concessions will have a dramatic impact on the decision, it is essential to understand all of your available options and implement a strategy to leverage them. It is critical to the success of your negotiation that your landlord knows that you have the option to relocate, which means that you need to begin negotiations well in advance of your lease’s expiration, ideally nine to 24 months before your current term ends.

	When you begin negotiations, you have two options available to you: You can work with the landlord’s agent and represent yourself, or you can hire a real estate broker. Here are some things you need to know if you choose to represent yourself in a lease negotiation.

	Under state law, a real estate broker can enter into an agreement to serve clients as an 

. An agent is obligated to serve his or her client’s interests with the utmost good faith, loyalty and fidelity. Clearly, it is not practical for an agent to act with utmost loyalty to two parties on opposite sides of a transaction, meaning the landlord or landlord’s broker should not also represent your interests.

	Simply put, if you do not bring an agent into the negotiations, no one will be protecting your interests but yourself. If you deal directly with the landlord or landlord’s agent, it is crucial to remember that he or she is not legally or logically in a position to advocate on your behalf, so it is important to exercise discretion with the information you share with the landlord’s agent.

	Even if your building’s ownership and management are pleasant to work with, respond to issues quickly, and maintain the building well, their primary interest is maximizing profits. Landlords know that without market knowledge, tenants have no baseline against which to compare a lease offer. Therefore, a landlord will most likely offer the highest lease terms that he or she believes an uninformed tenant will accept.

	The only way to know if any offer is truly competitive is to compare it to the market. To do this, you need to identify all the available properties that suit your needs, and then tour a significant number of them to determine which ones will be best suited for you and ensure that you don’t miss any opportunities.

	You then need to negotiate with the landlord at each property to receive the best offers for a suitable space for your practice. These offers will include terms for the base lease rate and any increases in the lease rate, as well as concessions such as free rent and an improvement allowance. You’ll also need to know the lease terms and concession that new tenants in your current building are receiving from your landlord. At each step along the way, you’ll be dealing with a professional real estate broker who is hired to achieve the best possible terms for the landlord.

Read more: How changing patient expectations will impact your practice 

	If this sounds daunting to handle yourself, you do have an alternative. You can hire an experienced real estate professional as 

 interests in mind. He or she can provide you with comparable properties’ lease rates and build out allowances and other concessions, which can then be used as valuable leverage on your behalf in the negotiations with the landlord. Ideally, you should select an agent with experience representing health care practices because he or she will be able to achieve specific terms and concessions that are not generally available to other types of tenants. Your agent will handle all the research and communication with the landlords while maintaining a professional negotiating posture on your behalf. 

	Fortunately for you as a tenant, landlords and sellers have agreed to pay for an agent’s services on your behalf, so it costs you nothing. Commercial real estate is structured similarly to residential real estate. If you were to sell your home, you might list it with a broker and agree to pay a commission. The commission is split between the listing broker and the broker who brings the buyer. If the listing broker is able to find the buyer directly, then he or she would earn a double commission. The same kind of arrangement is made in the commercial real estate market, and you as a tenant or buyer have access to professional representation at the seller’s expense.

	Most health care providers have plenty to do serving their patients and running a successful practice.  Spending hours on end making sure your lease renewal is competitive and handled properly is typically not the best use of your time. Since professional representation does not cost you anything as a tenant, it makes sense to let a licensed real estate professional review your lease, represent your interests in your negotiations and then help you capitalize on the current market conditions so that you can achieve the best possible terms.

Working with a real estate broker can help you achieve the best possible terms. 

Why a broker may be beneficial for your next dental office lease negotiation

	Leases and lease renewals are not typically conducted on a level playing field. After all, the landlord is in the real estate business and most doctors are not. By planning ahead and having professional representation, it is possible to negotiate a lower lease rate and receive a substantial tenant improvement allowance and free rent.

	How does the lease renewal process work?

	An important clause found in a standard lease is the renewal option. This allows you to extend your lease for a predetermined amount of time (often three, five or 10 years) by giving your landlord advance written notice. Renewal options include terms for specific lease rates, concessions such as free rent and tenant improvement allowance, and whether a new base year for operating expenses will be granted. Whether or not a renewal clause exists in the original lease, all of these terms are negotiable and play a large role in the financial structure of a lease renewal.

More from the author: Why a broker may be beneficial for your next office lease negotiation

	Renewal negotiations are most effective when conducted in the proper time frame, by having multiple viable relocation options and creating a strong posture to maintain the upper hand.

	As a rule of thumb, you should begin to consider the renewal process 12 to 18 months in advance of your lease’s expiration. This is recommended so that you can compare all relocation options in the market before your current lease options expire. Tenants who miss their lease options incur more risk. Landlords view this as an opportunity to push rents higher as the window of opportunity to relocate closes. If tenants holdover (stay in the space after the lease expires), they often see penalties of 150 to 200 percent of their last month’s rent and can also incur damages if they holdover without permission. The bottom line is that if there is not ample time to relocate if necessary, the landlord has a strong upper hand.

	What type of cost savings can be achieved through a successful renewal?

	If properly negotiated, you can achieve significant rent savings, a build out allowance, free rent and other concessions. It is very common to start a lease renewal term at a lower lease rate than what you are currently paying. In many markets, landlords are offering aggressive concessions and more attractive lease terms to good tenants to keep their buildings leased and avoid vacancies. The amount of overall savings will depend on the availability of competitive vacancies, the efficiencies of the buildings, and your market knowledge and ability to negotiate business points.

	What are some common mistakes practices make during the process?

	One of the most common mistakes practices make is negotiating without the help of a commercial real estate professional, specifically one who specializes in representing health care providers. Some believe they can save money by not using an agent, but to benefit in real estate, leverage is the key to posture. Landlords are in the real estate business and negotiate with professional guidance. Selecting an expert to represent you provides the leverage needed to receive the best possible lease terms. Further, landlords are typically responsible for paying commissions, so professional representation is available to you at no out-of-pocket costs.

	Another mistake practices make when entering into a lease renewal negotiation is not being familiar with their current lease terms and risk exposure. Prior to contacting the landlord about a lease renewal, you should be well aware of your current lease terms, including every option and deadline. Most leases contain options that must be exercised within a specific time period, typically six to 12 months prior to the lease’s expiration. If you allow this period to pass, you risk losing all rights outlined in the option, which can cause the negotiations to begin at a disadvantage.

Trending article: Why having a good credit score can boosts your dental career

	How do I calculate what I am currently paying per square foot?  

	Knowing what you are already paying per square foot is especially important if you are thinking about renewing your lease. What you are paying now versus what buildings are leasing for in your immediate area can be vastly different, especially if your lease has had automatic escalations in the rate over the term of the lease. The way to calculate your price per square foot is to multiply your monthly rent by 12 months and divide it by your square footage. Keep in mind that NNN or CAM charges (operating expenses for the property) are also calculated in the same manner.

	Successfully negotiating a lease renewal is more than bartering, bluffing or asking for a good deal. Landlords and their professional representatives are in the full-time business of maximizing their profits, even if it means taking advantage of uninformed tenants. You can level the playing field by engaging your own professional representation, gaining competitive market knowledge and having multiple options for your office space. When done properly, a well-negotiated lease renewal can have a dramatic impact on your practice’s profitability.

Planning ahead is key to negotiating a lower lease rate. 
