Leases and lease renewals are not
\ntypically conducted on a level playing
\nfield. By planning ahead and having
\nprofessional representation, it is possible to negotiate a
\nlower lease rate and receive a substantial tenant
\nimprovement allowance and free rent.
\nHow does the lease renewal process work?
\nRenewal options include terms for specific lease rates,
\nconcessions such as free rent and tenant improvement
\nallowance, and whether a new base year for operating
\nexpenses will be granted. Whether or not a renewal
\nclause exists in the original lease, all of these terms
\nare negotiable and play a large role in the financial
\nstructure of a lease renewal.
\nWhen should the process begin?
\nAs a rule of thumb, you should begin to consider
\nthe renewal process 12 \u2013 18 months in advance of
\nyour lease\u2019s expiration. Landlords view this as an
\nopportunity to push rents higher as the window of
\nopportunity to relocate closes. If tenants hold over
\n(stay in the space after the lease expires), they often
\nsee penalties of 150% \u2013 200% of their last month\u2019s
\nrent and can also incur damages if they holdover
\nwithout permission. The bottom line is that if there is
\nnot ample time to relocate, if necessary, the landlord
\nhas too strong an advantage.
\nWhat type of cost savings can be achieved through
\na successful renewal?
\nIf properly negotiated, you can achieve significant rent
\nsavings, a build-out allowance, free rent and other
\nconcessions. It is very common to start a lease renewal
\nterm at a lower lease rate than what you are currently
\npaying.
\nBelow are actual examples of recent lease renewals for
\ndental practices located in the Midwest. These cases
\nillustrate the importance of properly negotiating your
\nrenewal:<\/p>\n
Case #1
\nLandlord \u201cBest Offer\u201d Final Terms
\nStarting Lease Rate (Per SF) $24.00 $18.00
\nMonthly Payment $4,000 $3,000
\nOther Landlord Concession Tenant option for early termination in
\nthe event the practice is sold
\nTotal Savings (5-year lease) $60,000<\/p>\n
Takeaway: Many landlords see lease renewal as an
\nopportunity to aggressively raise rates. Good renewal
\nnegotiation can drastically improve on what is claimed
\nto be their \u201cbest offer.\u201d Additionally, certain lease
\nterms make it easier to sell your practice and can be
\nachieved during renewal.
\nTakeaway: Renewing your lease without properly
\nnegotiating the terms could lead to overpaying by
\nhundreds of thousands of dollars.
\nTakeaway: Lease renewal negotiations are
\nmultifaceted; significant savings can be achieved
\nthrough concessions other than lease rate.
\nTyler Van Eps and Carr Healthcare Realty provide real estate services to
\nhealthcare tenants and buyers. Tyler specializes in representing dental
\npractices. Telephone: 612-708-2631<\/p>\n","protected":false},"excerpt":{"rendered":"
Leases and lease renewals are not typically conducted on a level playing field. 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? Renewal options include terms for specific lease rates, concessions […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":0,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-901","post","type-post","status-publish","format-standard","hentry","category-dental-practice-management"],"_links":{"self":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=901"}],"version-history":[{"count":0,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/901\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}