• Magazine
    • Past Issues
    • Subscribe
    • Change Mailing Address
    • Surveys
    • Guidelines for Authors
    • Editorial Calendar
    • Editorial Deadlines
    • Dynamic Chiropractic
      • Newspaper
      • Subscription
    • The American Chiropractor
      • Magazine
  • Practice
    • Business Tips
    • Chiropractic Schools
    • Clinical & Technique
    • eBooks
    • eCourses
    • Sponsored Content
    • Infographics
    • Quizzes
    • Wellness & Nutrition
    • Personal Growth
    • Podcast
    • Coronavirus (COVID-19)
  • Resource Centers
  • Products & Services
    • Buyers Guide
    • Products Directory
    • Submit a Product
    • Vendor Login
  • Datebook
    • Become an Events Poster
    • Post an Event
    • View Events
  • Jobs
    • Jobs
    • Post a Job
  • Advertise
    • Advertising Information
    • Media Kit
    • Contact Us

Your Online Chiropractic Community

Chiropractic Economics Your Online Chiropractic Community
Subscribe
  • Home
  • Current Issue
  • News
  • Webinars
  • Chiropractic Research
  • Students

Renting office space: 8 issues to watch for

Dale Willerton & Jeff Grandfield May 7, 2019

From reconciliation billing to tenant auditing, know your rights when renting office space

CHIROPRACTIC TENANTS ARE RARELY HAPPY WITH THEIR OPERATING COSTS; AT BEST, THEY’RE AMBIVALENT TO THEM and, at worst, they’re upset with them. The two issues that most upset chiropractic tenants renting office space are ever-increasing operating costs and the landlord’s lack of attention to fully maintaining the commercial property.

Chiropractic tenants can, of course, request a limit on the amount that operating costs can be annually increased, but landlords resist this because these are supposedly true costs passed on to the tenant and not normally a profit center for the landlord.

Buried contract issues

Chiropractic tenants should also watch out for other issues buried within operating-cost clauses that can cost them dearly when renting office space:

Administration fees — If chiropractic tenants are paying the property manager’s salary through operating costs, but the landlord adds a 15 percent administration fee to CAM costs, this can be considered double-dipping (or double billing for, essentially, the same service). 

Landlord operating cost reports to tenants — Many landlords provide only superficial operating cost information to tenants. Sometimes these reports are not only insufficient for the tenant but are not sent out in a timely manner. 

Occupancy levels and occupancy costs — A lease agreement may state that operating costs are charged back to tenants assuming that the property is 95-100 percent leased and occupied. This means that if the property is only 70 percent occupied, those tenants carry 100 percent of the operating costs.

Proportionate share misallocations — If your practice is located on the main floor of a property, your patients will never need the building’s elevator or escalator. In this case, should you have to pay a proportionate share of elevator or escalator maintenance? Just because a tenant occupies a certain percentage of the building doesn’t mean they’re equally responsible for all operating costs as well. 

Reconciliation billing — The industry norm is for landlords to budget future operating costs and then reconcile once per year. Chiropractic tenants can get walloped with unexpected reconciliation statements from landlords, with only 15 days to pay or be found in default. Negotiate so you can repay these overages over time (perhaps six months). 

Tenant audit rights — The landlord has a fiduciary responsibility for accountability to the tenants for the money collected from and spent on behalf of tenants. The lease should include tenant audit rights and allow you to examine the landlord’s books. 

Underestimated budgets on new properties — If you’re leasing commercial space in a new building, don’t be surprised if the operating costs jump 25-50 percent more after the first or second year. Landlords have been known to under-budget operating costs on new properties to help their pre-leasing program. 

Utilities — Electricity, natural gas and water may be provided by the landlord or separately metered for each tenant. In some cases, the landlord may have one meter on the property and a check meter on each tenant’s unit to measure consumption. If you’re paying your own utilities to the utility company, you’ll have your own meter. In many cases, the landlord bills back utilities to tenants in operating costs. Make sure that you know — in advance — what the lease agreement calls for so you don’t have to pay twice. 

JEFF GRANDFIELD and DALE WILLERTON of The Lease Coach are commercial lease consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES. They can be contacted at 800-738-9202, by email at DaleWillerton@TheLeaseCoach.com or JeffGrandfield@TheLeaseCoach.com, or by visiting TheLeaseCoach.com. 

Related Posts

  • Chiropractic as anti aging doctor: Baby Boomers (ages 55-73) approaching 75 million in populationChiropractic as anti aging doctor: Baby Boomers (ages 55-73) approaching 75 million in population
  • Thirty-Two Complete Doctor of Chiropractic program at Sherman CollegeThirty-Two Complete Doctor of Chiropractic program at Sherman College
  • Chiropractic practices and managing multidisciplinary health care financesChiropractic practices and managing multidisciplinary health care finances
  • Deadline for reporting HITECH security breaches is approachingDeadline for reporting HITECH security breaches is approaching
  • The SOAR method for perfect postureThe SOAR method for perfect posture
  • More than 100 Million Americans have diabetes or prediabetesMore than 100 Million Americans have diabetes or prediabetes

Filed Under: 2019, Chiropractic Business Tips, issue-7-2019

Current Issue

CE issue 4 cover

Follow Us

  • Facebook
  • Twitter
  • Instagram
  • LinkedIn
  • YouTube logoYouTube logoYouTube

Compare Subscriptions

Dynamic Chiropractic

The American Chiropractor

3948 3rd Street South #279,

Jacksonville Beach, FL 32250

Phone 904.285.6020

CONTACT US »

Privacy Policy & Terms of Service

Copyright © 2021, All Rights Reserved

SUBSCRIBE TO THE MAGAZINE

Get Chiropractic Economics magazine
delivered to your home or office. Just
fill out our form to request your FREE
subscription for 20 issues a year,
including two annual Buyers Guides.

SUBSCRIBE NOW »

Latest Chiropractic News

  • Cleveland University-Kansas City Launches New Continuing Education Website
  • New Report Cites Nutrition Response Testing® Helping Chiropractors Increase Value and Results
  • Military Husband and Wife Team Set to Expand The Joint Chiropractic into Puerto Rico