Call Us Now: 1-800-459-3413

Home

Tags

What Our Clients Say

 

Do you want to know why more and more health care professionals all around North America choose Cirrus as their partner in upcoming lease negotiations?
Find out what American dentists have to say about us!

Services

Seminars

About Us

Insights

Contact Us

Negotiating Office Lease for A Small Business

Many small business owners and entrepreneurs (and healthcare practitioners definitely fall in this category!) get themselves into trouble by leasing too much or too little space. They then find themselves locked into a contract that no longer fits their needs. Here we discuss the pitfalls you should be on the lookout for, as well as ways you can negotiate expansion rights and early termination language into your lease.

More ...

Lease Negotiations


Lease Negotiations

Cirrus Tenant Lease Services has been negotiating leases for health care professionals across North America since 1994. We are the recognized leader in the industry and successfully negotiate hundreds of professional leases each year. At Cirrus we understand the specific needs health care practitioners have and the challenges that they face. We have developed negotiation strategies and processes designed to ensure that those needs are met and challenges overcome. Our negotiators work to give the practitioner the maximum amount of flexibility with minimum liability.

Whether you operate a medical or dental clinic, Cirrus has developed a unique and results-oriented process that ensures your business is set up correctly, guaranteeing minimal risk to you, the practitioner, while maximizing the flexibility and future choices of the practice.

Over the years, and after having reviewed over 10,000 health care clinic leases from all over Canada and the United States, Cirrus has found that landlords have enjoyed profits far beyond what would be a “market” lease because of the lack or awareness and understanding of doctors and dentists on how to properly structure their practices' tenant lease. Landlords over the years have become very good at creating lease documentation that not only allows them to earn significant dollars through rental payments, but also by building “leverage” in the documentation, and “enforcing” the lease and its specific terms and conditions throughout the Term of the lease.

Depending on the type of practice as well as the short and long term goals of the practitioner, Cirrus has found that the following components of leases have traditionally provided landlords with maximum “leverage,” thus increasing the risk level while decreasing the flexibility of tenants throughout North America:

Tenant Construct: Over 75% of health care leases are not set up with the proper tenant construct. Overwhelmingly, landlords have convinced doctors and dentists in the past that they should be signing leases under their personal names, thus leaving the landlords with the maximum in guarantees of the covenants of the lease. Do landlords ever sign leases under their personal names? Of course not - they know better. Depending upon the size and type of clinic you operate, there is almost always a more suitable and protective way of signing a lease.                                                                                                                  

Assignment Provision: Unfortunately, most landlords know that whether your clinic is a medical or a dental office, the likelihood of you eventually assigning (transferring) your lease to another practitioner is high. Dentists are lucky enough to be able to actually sell their practices – and the assignment provisions in the lease dictate how easy or difficult that will be. When physicians retire, their practices are typically assigned to a younger physician who is brought in to carry on the practice. In either case, not setting up this ‘transition' properly in advance of this transfer occurring means the potential for a more difficult and/or costly process. Set up properly at the start of a lease, these difficulties can almost always be avoided or prevented.                                                                                                                 

Options to Extend (Renew): This is one of the most misunderstood components of any commercial lease. Set up properly, these Options can provide the basis for growth and continued long term business success of any type of clinic. So long as Options to Extend are backed up by a fair and reasonable lease document, they should be used to continue and extend the tenancy in that particular location. But because exercising Options means that no changes will be permitted to the document after the letter has been submitted to the landlord, one must ensure that the document does not continue to put the clinic and practitioner at risk for a further period of time. If it is determined that the document does contain significant risk (which is often the case…), the Options should not be exercised, but rather, the clinic should renegotiate some of those risks out of the document, while providing for flexibilities to be added (i.e. Death & Disability Clause).

What is the Best Strategy for Eliminating These Risks
At the End of Term…?

Once the risks are identified in your clinics' lease document, the best way to ensure that changes can and will be accepted by the landlord depends on your understanding of the “Tenant Lease Cycle.” By starting the renewal process 12 – 14 months prior to your expiry date, you are greatly reducing the landlords ‘leverage' to demand renewal terms that in many cases are unfair and not reflective of the market around you.

Landlords know that if they can avoid entering into renewal discussions with you until you are within the last couple of months of the Term, they will guarantee a much better deal for themselves. The simple way to counter this well known landlord strategy is to (i) know when your lease expires, (ii) identify the risks contained in your current documentation, (iii) establish your practice's short and long term goals, (iv) understand the market, (v) and then commence discussions with your landlord. By following this process, and starting it well enough ahead of time, you are guaranteed to be in a much better position to negotiate – and get valuable changes.


 

 

 

 
My business is dentistry, not commercial leases, so I was very happy to have someone with that experience to do all negotiations for me. Whether you are comfortable in your landlord/tenant situation or have specific problems, it's not worth losing time over time-consuming negotiations that can add up to costly amounts over the term of a lease.
Dr. Gloria Clarke, Atlanta, GA
 

How We Can Help You


When it comes to handling your office lease properly, you need Cirrus and our suite of services for health care professionals on your side. Since 1994, Cirrus has specialized in the niche area of lease negotiations for dentists and doctors. We have used our knowledge, insights and expertise to negotiate literally thousands of leases since then. Think of your tenant lease as a living thing, with its life cycle. A lease completes its cycle every 5-10 years, depending on the term, and requires the appropriate maintenance to ensure that your real estate is evolving and adapting to best fit with the overall changes in your career plan at each stage. The best way to ensure that your office lease stays current when the cycle is up is to perform a ‘check-up’, to make sure everything is functioning properly.

Administration Analysis Negotiations

 

The diagram above outlines some of the core services we offer that should be applied to your practice's office lease at your next expiry date, starting with a thorough review (Lease Analysis) of the entire lease, followed by actively changing the terms to better reflect your current needs (Lease Negotiations), and then followed up with a routine check (Lease Administration) once a year. Click on each of the service segments above to learn more.


 

 

5 Steps of the Lease Negotiations Process


Last time you negotiated your lease, and assuming you sought the advice and assistance from trained professionals, did you find yourself ‘project managing' the entire process? Did you find yourself trying to coordinate the efforts of both a realtor (or real estate broker), and then once the rents were agreed to, did you hire an attorney to deal with the lease? What a waste of your time!

At Cirrus, we have studied the amount of time required to properly deal with a lease agreement at renewal time for health care professionals, and have concluded that based upon the average hourly income of a typical physician or dentist, spending the time necessary to properly negotiate a lease actually costs the average health care provider over $15,000 in their time. For a fraction of that cost, Cirrus will completely manage the negotiation and renewal process for you – all of it from start to finish.

One of the elements of Cirrus' lease negotiation service that makes it unique is our mastery of a “5 Step Lease Negotiation Process”® that was originally developed by Lewis Gelmon in 1994, and since then, has been tested – modified – and tested in literally thousands of lease negotiations since then. Like just about every other successful procedure or business process, by navigating through a lease negotiation by following a series of steps, one before the next, our clients have benefited from substantial improvements in their leases, from significantly reduced risk, increased flexibility, and sizeable cost savings over the long term.

The diagram below outlines exactly what the “5 Steps” are, and if you click on each of the boxes, you will get a brief explanation of each step.

 

 
 
 
 
 
 
 


 

 

 

Knowing when to start renewal negotiations is half the battle

 

The biggest mistake that professionals make when renegotiating their lease is that they wait until the last minute (often within a month of expiry) to commence discussions with their landlords. Waiting until the last minute gives you no time to prepare and you end up with the least leverage possible.

More ...

Chicago Dental Society: An expert shares tips on renewing leases

 

No matter what anyone tells you, we assure you that dentists and doctors don't have to sign a contract “because it's standard.” In fact, a lease may also contain 50 dates that all signify different commencement and ending points.

More ...

Tenant Tips. Importance of Understanding your Market.

 

The ‘market’ that we are referring to is the real estate leasing market within the vicinity of your location (or potential location). Prior to entering negotiations with the landlord, you must have a strong understanding of this market. Without this understanding, you will not know if the Landlord is offering you fair financial terms and ultimately, a good deal.

More ...

Tenant Tips. Needs Analysis: What's Your Career Plan?

 

Before commencing negotiations with your landlord, you must have a “game plan”. To devise this plan, you must assess your current situation, short, and long term goals. Some things to consider include: age, health, sale of the practice, office space requirements.

More ...


Copyright © Cirrus 2007-2008 All Rights Reserved.
Home | Privacy Policy | Contact Us