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Commercial Real Estate Lease Negotiation Questions

Don't forget to consider these factors before negotiations

In our experience as tenant representatives, we often see eager business owners and new practice owners find a great space, and then quickly rush to sign the lease. It is okay to be excited, but pausing to ask yourself these key questions can literally save you thousands in the future:

Are the rental rates and annual increases in line with the local market?
This should be easy to determine with a market analysis during your space search. Keep in mind that depending on the space, just a $1.00/PSF or $2.00/PSF difference in the first year’s rent can snowball into tens to hundreds of thousands of dollars over time.
Do you have a concession package that provides enough time for construction?
Lease concessions, such as free rent, will save you from having to pay the base rent while your space is under construction and not yet usable. With no free rent, the rent commencement will start immediately, and it could take up to six months to complete a major renovation.
Do you have a clear understanding of your construction costs?
Bringing in an architect to create a test fit and a general contractor to create a budget for the construction will provide a much clearer picture of the total costs. Without a design and budget, you could later find out your vision is either not possible or will be drastically more expensive than originally perceived. Remember, a general contractor’s budget is only as good as the drawing they’re given. To get a true cost estimate, they will need a full set of construction drawings, which can take a month to develop once you’re happy with your layout.
Is there a relocation clause that lets the landlord move you?
Most landlords want to add a relocation clause, but even if the complete reconstruction of the new space is at their expense, an unexpected move would not only be very inconvenient, but it could financially disrupt your business too.
Do you have exclusivity rights to prevent competitors from moving into the same building?
Especially in healthcare or retail, if applicable, allowing competitive companies to be nearby can negatively impact the patient/customer base, which affects the bottom line. If this is important to your business, an exclusivity should be negotiated even before receiving the lease.
Do you have a Right OF First Refusal to lease or buy?
Depending on your projected expansion plans or goals, either having the option to lease any adjacent space or to eventually buy the building could be a huge benefit, because if the space is future proof, it could prevent you from an expensive move down the road.
Does your lease allow you to audit the charges for operating expenses?
In Triple Net (NNN) leases, tenants are responsible for their portion of the Common Area Maintenance (CAM), property taxes, and the landlord’s insurance, and the projected costs for these are billed to the tenant each month and then reconciled at the end of the year. With the right to audit, a tenant would have the ability to see the itemized receipts for these nets in case there was a drastic increase one year, thus protecting them from any false charges.
Do you have the ability to assign your lease in case of a sale of the business or practice?
Especially with healthcare, you need the right to assign your lease when you eventually sell the practice. Without this, you would still be liable for the rent and all the responsibilities in the lease until the end of the term, regardless if you are still there yourself.
Does your personal guarantee release if you assign the lease?
Expanding on the last point, if you have a personal guarantee, it absolutely needs to expire if you assign the lease to someone else. If not, you would essentially be personally cosigning for the other person or business who takes over.

Don’t sign the lease until you’ve fully addressed these issues. It’s too risky to give landlords control over your business.

At Mirlo Real Estate Partners, we focus on negotiating these critical business points, so you can secure a lease that grants you the freedom to run a successful business, while saving money on rent and other fees.

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Remy was very helpful and straight forward with me about the challenges of starting a practice. He kept me well informed and was very proactive, a professional in every aspect of the real estate business. I could not have navigated this process without him; I will definitely use Remy for our future growth needs.

Dr. Kevin Semma, OD

Remy has been an indispensable part of my journey to build a veterinary practice. I had another commercial realtor that was not familiar with veterinary profession when Remy reached out to me. When I decided to stay with my previous realtor, Remy was willing to answer any questions I had or help in any way, even though I was not signing with him. I felt he genuinely wanted my business to succeed and wanted to help. Soon I realized the importance of having a realtor who has special knowledge of the healthcare field when choosing a space and decided to reach out to him. Remy is very professional, relaxed, and inviting. He brings his own expertise as well as others to consult about different aspects of building a practice. Remy is available, thoughtful, supportive, and assists in problem solving concerns that arise. The process was less stressful, because he was a partner in the process, not just a realtor. I have and will continue to recommend him for any commercial real estate needs.

Dr. Katie Boatman, DVM

Working with Mirlo Real Estate Partners was a great experience, and I could not be more impressed with the level of service I received. From the very beginning, Nick and Remy helped me establish my preferences and outlined the best strategy for my specific situation. Not only werethey able to find the PERFECT space for me in a brand new medical office building, but due to the tight deadline, they were also able to find me an OUTSTANDING temporary space to occupy during the construction period to minimize downtime for my practice. Their hard work and dedication really made the transition seamless. Their knowledge of my needs and the market was STRONG and helped me achieve VERY FAVORABLE terms. I would highly recommend them to any healthcare provider for their commercial real estate needs.

Dr. Alon Kahana, MD, PhD

We are incredibly grateful to Remy Isdaner for guiding us through the challenging journey of starting our veterinary practice. Remy’s knowledge was deemed invaluable from the outset, assisting us in every aspect of the startup process. Remy found just the right building, and it wasn’t even on the market. He contacted the owners and successfully negotiated a favorable deal, making our dream of owning a practice a reality. Remy’s professionalism, persistence, and genuine care for our success truly set him apart. We highly recommend Remy to any business owner needing support with their business endeavors!

Dr. Krysten Andrews, DVM & Dr. TJ Vernaci, DVM

As an established oral surgeon, I can wholeheartedly recommend Remy Isdaner and Mirlo Real Estate Partners to any medical professional seeking to start or expand their practice. Not only did Remy advocate and fight for my best interest, but he also demonstrated an unparalleled understanding of my industry, exceeding my expectations and making the process as smooth as possible. With Remy taking so much off my plate I was able to focus on building and marketing my business, allowing me to open my doors with a full schedule of patients. I could not be more satisfied with my experience working with Remy and my new, state-of-the-art oral surgery practice.

Dr. Robert John, DDS, MD

I am thrilled to share my experience with Mirlo Real Estate Partners. As an oral surgeon, the thought of handling a commercial real estate transaction and the subsequent buildout of my new office was daunting. However, Mirlo made the entire process seamless and efficient. From the outset, they were attentive to every detail of my requirements. Their knowledge and professionalism were evident as they guided us through each step, ensuring that every aspect of the deal was executed at the highest level. Nick and Remy worked hard to advocate for us and were committed partners in our success. Thanks to their exceptional service, I am now operating in a state-of-the-art facility, perfectly suited for my patients and staff. I wholeheartedly recommend Mirlo Real Estate Partners to anyone looking for a reliable and highly competent commercial real estate partner.