Negotiate Your Medical Office Space Lease in 5 Easy Steps

Negotiating Medical Office Space Leases
Is Your Medical Office Space Lease Legit?

If you are a doctor, it is no surprise to you that your medical office location dictates your success.  You have probably heard the expression used by real estate agents that “location is everything” or what makes for a great business– “location, location, location.”  So, when you find that ideal medical office space for lease, it is essential that you secure that property.  Remember, unless your landlord hands you tablets, nothing is set in stone.


Number 1: Measure the space yourself to determine useable space

When you are negotiating the space for your medical job, you should measure the spaces yourself.  Why is this?  It is quite simple.  If the property boasts to be a 3,000 square foot office, you may be excited to get the unit.  However, if you find that the office has only 2,000 square feet of usable space, it may become less attractive.

Measuring the space for your medical job is also paramount to your negotiations, even if you have been established in the location for years.  Calculate the total space and then ask your landlord for the unit lease price: the price per square foot.  For example, if your landlord is charging $4 per square foot on the 3,000 square foot facility, the rate would be $12,000.  Yet, if you only have 2,000 feet of usable space, you may be able to negotiate that price down to $8,000.


Number 2: Get the option to renew in writing

The perfect location for medical office jobs are in areas which have the most exposure to potential patients.  Doctors, medical staff, and practitioners all understand this and will be looking for a way to wedge into this ideal piece of real estate.  Those who sign the mythological “standard lease” agreement are facing eviction from the property should the landlord be able to find a tenant who can pay a higher rate on the lease.

Renewable leases allow you (the tenant) the option of leasing the property after your lease has expired. Most renewable leases will establish the rent for a certain period of time, but will allow for negotiations of the lease after an allotted amount of time.


Number 3: Realize that many brokers need to keep lease prices high

Brokers and real estate agents are NOT working in your best interests when it comes to your lease price. This is because agents and brokers work primarily off of commission.  This commission (unless it is fixed in a set price) is based upon a percentage of the final lease price.  That being said, the higher the lease price, the greater their fee will be.  Yes, agents may negotiate that $12,000 lease down to $8,000, but they have a threshold in mind that will yield the best profitability for them.  Don’t forget that you are a means to an end.


Number 4: Have a commercial inspection of the property performed

Medical office jobs need to be established in a sterile environment.  Getting a professional commercial property inspection is a great way to negotiate your lease.  Because you need to have a space that does not pose a health threat to your patients, any fixes which need to be done to the property can be negotiated into the lease.  For example: if an adjoining property has a Freon leak in their HVAC system which has caused the flooring of your medical office space to become contaminated, you could negotiate that the lease be lowered so that you can fix the problem, or you can have the landlord pay to remove the contaminants.  Finding structural problems with the unit and building will also help you negotiate a generous tenant improvement allowance.


Number 5: Get a lease lawyer to review the contract

While you may have the top doctor job that the profession offers, the odds are that you do not have a law degree.  Hiring a lease lawyer will get you a negotiation angle that is legal.  Most contracts also have holes in them which a landlord can use to get out of a contract should he or she find a tenant that wants to pay more for the lease.  By employing a lease lawyer to view and negotiate the contract on your behalf, you will have a greater probability of catching and eliminating these loopholes.


Other considerations

In order to be more aggressive in your negotiations also keep the following in mind:

  • Have the unit price for other similar properties in the area.
  • Do not settle on one location, but have several possible locations. This will keep you from settling for a higher lease just because you “love it.”
  • Never give out your budget to a potential landlord. If your cap is $3,000/month then tell the landlord it is $2,000.  If you tell landlords that you can spend more money, they will naturally try to get more money.
  • When renewing medical office space leases, begin the re-negotiation process at least 6-12 months in advance so that you have more leverage with landlords. If they think you are doing it last minute, they can use that to their advantage as you will have few other choices.

Remember, your lease is not set in stone.  You should not fall for the Standard Lease Agreement or the “everyone has the same lease” argument.  Only those who have no experience in leasing take the first offer that comes to the table.  Those which have done their research understand that leasing medical office space has a great deal to do with smart negotiations.

DoctorCPR Physicians Group. is America’s #1 Website for Medical Jobs + Practice Resources

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