As a chiropractor, your specialty is proper patient care.
However, you may not be a specialist in business management and the tasks involved in the running of a practice. So it is important to know that help is available. Often, an outside professional or consultant can be hired to assist you, where and when necessary. Consultants can help with staffing, accounting, and marketing to ensure a smooth-running and profitable practice.
Did you know that chiropractic tenants have options for commercial lease negotiating consultants as well? Depending on who you choose to negotiate the best lease deal for you, you may get results that might not work for your practice—selecting the right professional is critical.
Chiropractors often turn to legal counsel to negotiate their practice leases. Most lawyers, however, will focus primarily on the legality of the office lease, which is rarely in question.
Offers to lease and formal lease agreements are filled with negotiable financial clauses, such as addressing free rent, tenant allowance, rental rate, etc., that the lawyer may not address. Furthermore, lawyers normally charge by billable hours and the total amount could be much more than you expect.
The real estate agent
New location: Many times, a real estate agent or broker may seem like they are working for you, but sometimes this is not the case. Agents can appear to be helping chiropractors by showing them available commercial space and answering questions, but agents primarily work for landlords.
Agents, in fact, are, typically paid a healthy commission for closed lease deals. How much can the agent earn? With the industry norm of a 5-percent commission on base rent for the entire term, an agent can easily earn tens of thousands of dollars—a nice motivation to get your signature on a lease. When you sign for a longer lease term or agree to pay more rent, the agent’s commission typically increases.
Lease renewal: Most landlords don’t want to pay a real estate commission on lease renewals nor do they budget for this expense because the chiropractor is already a tenant in their building.
Therefore, chiropractic tenants should exercise caution in this regard because the agent’s commission is added back onto the chiropractor’s rental rate. Take note that some real estate agents charge the chiropractor a fee and collect a commission from the landlord, for both new leases and renewals.
A lease consultant
Look for a lease consultant who works only for the chiropractic tenant and has a fixed project fee. They never accept fees or commissions from the landlord.
A lease consultant can negotiate the rental rate, eliminate personal guarantees, conduct site selection, negotiate new leases, and specialize in negotiating rent reductions on lease renewals. As a result, many chiropractors get the best lease deal possible initially, see their lease renewal rental rates decrease, or receive free rent and tenant allowance inducements, even on lease renewals.
Whether you are looking for a new location to lease or facing a lease renewal, don’t go it alone. Remember that the landlord often has a full team of leasing representatives, property managers, and legal counsel helping to maximize rental rates.
Start the lease renewal process 12 to 18 months in advance. A landlord may be absentee, elusive, or will have delegated the leasing process to a property manager who knows what the other tenants in the building are paying for rent.
Also, proper lease negotiating takes ample time to allow for the back-and- forth dialogue necessary between a landlord and a tenant. Lease negotiation is a process, and it is not in your best interest to rush through it. For new lease locations, give yourself at least nine months. This will allow you plenty of time to view numerous properties, collect and review lease proposals with business partners, secure any necessary funding, and compare multiple offers.
And also, if you are planning to sell your practice soon, a lower rental rate and a better lease deal will both be attractive to a potential purchaser. The landlord is taking your commercial lease negotiations seriously and it pays for you to do the same.
Dale Willerton (left) and Jeff Grandfield (right) are The Lease Coach, commercial lease consultants. They are speakers and the co- authors of Negotiating Commercial Leases and Renewals for Dummies. For a copy of their free CD, “Leasing Do’s & Don’ts for Chiro Tenants,” email your request to firstname.lastname@example.org. You can also contact them through theleasecoach.com.