Have you ever thought about what you would do with the money if you won the lottery? What if I told you that you may already have the winning ticket and you didn’t even know it? Then, what if I told you, the ticket is your lease.
Your rent is likely one of the top three most expensive items on your accounting statement, after compensation and benefits. By effectively restructuring your lease, you could drastically improve your bottom-line without working more hours, seeing more patients, or cutting more expenses.
Recently, a dentist in Atlanta restructured his lease with the help of a tenant-only real estate advisor, who specializes in dental real estate. The dentist had been in their space for several years and the rent had creeped above market rent. The dentist saved several dollars per square foot on base rent, which increased monthly cash flow. His real estate broker also negotiated significant tenant improvement dollars, which the dentist was able to spend to freshen up the office space, making it more up-to-date and inviting to patients. The cost savings and cost avoidance amounted to more than $300,000 over the term of the seven-year lease. Just think what you could do with $300,000 in your pocket!
In addition to finding potential money in your lease, there may be risk factors that need to be addressed. Perhaps additional renewal options need to be negotiated or there is a personal guarantee that should have expired. Maybe there is a redevelopment clause hidden in the previous lease that was not understood. While these examples of risk factors don’t save immediate dollars, if they aren’t negotiated properly they could cost a lot of money down the line.
When renewing or extending a current lease, it is imperative to take full advantage of the opportunities afforded in today’s commercial real estate market. The current state of the market has afforded tenants to lock in at rental rates before they continue to increase. Despite vacancy rates decreasing, landlords are still offering concessions (lower rental rates, free rent, tenant improvement allowances) that if negotiated correctly can be a windfall for your dental practice.
How do you know if there is new-found money or risk factors hiding in your lease? Call a healthcare real estate specialist with expertise in dental real estate and ask for a complimentary lease review. This real estate professional will look for hidden opportunities to save you money, offer advice, and negotiate on your behalf.
Look for an advisor that works exclusively on your behalf to solely represent your interests as a tenant and not the interests of both you and the landlord. Don’t go at this process alone or you will not be able to get the best terms. Bringing in a real estate advisor early in the process is vital to create leverage and generate the most savings. Let your broker handle the conversations so you do not unknowingly give information that can hurt you in the negotiation process.
A tenant-only broker is compensated by the landlord, similar to a buyer’s agent in the residential market. That means, you don’t have to pay for their services and yet significantly benefit from them.
Dental offices have their own unique requirements that differ from other tenants. How do you choose the right broker to help you with this very important, highly specialized area of managing your practice? It is important to enlist the expertise of a real estate professional that has experience with healthcare providers and understands your business and the specific needs of your dental practice. With the right advisor on your side, you could literally add thousands of dollars to your bottom-line – and you’ll feel like you just won the lottery!
Through years of helping dentists and dental specialists with hundreds of projects, we are proficient in the requirements unique to the dental industry. Learn more about how our expertise in the dental industry.