5 mistakes chiropractors make when negotiating their lease renewal
As The Lease Coach since 1993 and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES, we have found that chiropractic tenants often leave a lot on the table when negotiating a commercial lease renewal. One of the biggest mistakes is assuming that everything will go smoothly.
Rarely do things ever go as planned and you always have to account for Murphy’s Law. Renewing your commercial lease takes just as much time, effort, negotiating expertise and careful consideration as your initial lease, if not more. The following are just five of the most common oversights we have witnessed of chiropractic tenants. Please don’t make these same mistakes.
Mistake #1: Allowing the landlord to retain your deposit
If your lease agreement required you to make a deposit for the initial lease term, then it is not acceptable for that deposit to continue indefinitely. Ask yourself, are you a security risk? Likely not. Have your rental payments been made on time? We frequently, successfully negotiate for a reduced or returned deposit at this time.
Mistake #2: Not allowing sufficient time
Lease renewal negotiation should begin twelve to fifteen months before the term expires. This will give you sufficient time to look at other sites and do your homework. Remember, you are the landlord’s customer and it is the landlord’s job to re-earn your tenancy. By “shopping around,” evaluating other sites, and collecting written offers to lease from other landlords, you are effectively creating competition for your tenancy and will be more prepared to move – if need be. If you can’t get a decent renewal rate, would you rather find out you need to move with twelve weeks or twelve months left on your lease term? Time will be your ally or your enemy, depending on how you use it.
Mistake #3: Undervaluing your bargaining strength
Several factors will determine your bargaining strength with respect to negotiating a lease renewal. These include the overall vacancy rate of the building and recent tenant turnover. Your size in relation to the entire property is relevant. It’s not whether you occupy 1,000 or 5,000 square feet, but more so what percentage of the building you represent that counts – the bigger your percentage of the building you occupy, the bigger the impact your vacating would have on the landlord. Your business history is also important. If you have remained a long-term tenant in the commercial property, your landlord will value your tenancy.
Mistake #4: Missing out on lease renewal allowances
Chiropractic tenants often don’t consider getting a tenant allowance on their lease renewal term. Approximately 75 per cent of our clients get a tenant allowance on their renewals. Remember, if the landlord is giving allowances to new tenants coming in, then why shouldn’t you get an allowance too? After all, your tenancy is proven, plus there is much less risk for the landlord putting cash into your renewal than taking a chance on a new tenant.
Mistake #5: Sharing business success
One of the main reasons a chiropractic tenant will be forced into a rental rate increase for a renewal term is the landlord’s belief that the chiropractic tenant can afford to pay it. The more successful your clinic is, the quieter you must be about that success. It’s important to stifle your staff as they are the ones who frequently tip off the property manager that you don’t want to move. While a commercial landlord won’t accept any blame for poor performance, they will take credit (and rental increases) when times are good for the tenant.
Chiropractors are at a disadvantage when it comes to commercial leases and commercial lease negotiating, as they are often up against landlords/leasing agents who negotiate lease deals regularly. If ever in doubt, hire a professional to advocate for you, represent your best interests and to get you the best lease deal possible.
Remember, in commercial leasing, chiropractic tenants don’t get what they deserve – they get what they negotiate.
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