Number 1: You Are Entitled to Representation With Your Real Estate
Some landlords employ intimidation, instead of respect, to achieve their goal of maximizing their returns, including:
- Telling tenants they are not allowed to have representation
- Telling tenants if they do hire an agent the tenant will have to pay them
Neither of these are true, nor are many other tactics they might employ to keep a tenant from representation. Simply put, the Landlord is trying nothing more than to see if the tenant will fold before the economic negotiations have even started.
Without representation retained by the tenant, there is little to prevent a landlord from arbitrarily making up rules in their favor. Their intent is to avert the tenant from negotiating on a level playing field by preventing them from obtaining necessary market information needed to achieve favorable terms.
It’s doubtful they would even attempt this tactic with large, national tenants. So why would they try this with smaller, less informed tenants? For exactly that reason… they don’t think the independent tenant will push back or know better.
Thankfully, you are reading this article!
Lease negotiations are different than negotiating the price of a car or trying to haggle for a better price at a flea market. They are complex transactions, layered with hidden opportunities for landlords to take advantage of anyone not represented by an expert. Landlords are professionals who are aware of these complexities. If a landlord says you are not allowed to have representation, that is a clear signal they do not respect your desire to be treated fairly.
This isn’t much different than if a doctor told a landlord they had to complete their own diagnosis or perform their own surgery. They wouldn’t accept that response and neither should healthcare tenants or buyers.
Don’t let a landlord or listing agent, who have spent decades perfecting their approach against tenants, dictate the rules of engagement on your next real estate transaction. Understand that you have the right to representation, no different than a landlord has the right to access quality healthcare.
Healthcare professionals that try to obtain a better lease rate and terms without fully understanding the immediate market and the top options available, are often left to ‘bartering’ with their landlord or even ‘begging’ to get a better deal.
The good news is that there is a much better process and game plan if you are properly represented. It is the equivalent of letting a doctor diagnose and create an appropriate treatment plan vs. a patient ‘guessing’ or ‘winging-it’ themselves.
Proper representation will help ensure you truly are receiving the most competitive lease rate and terms for your specific transaction by properly understanding the current market and overall opportunity.
Number 2: Your current lease rate and terms are most likely not as good as they could be
There are many factors that impact lease rates and terms for commercial spaces:
- Current and upcoming vacancy in a specific building or market
- Qualilty of the building and space
- Length of lease term
- Amount of tenant improvement allowance, free rent and additional concessions needed
- Financial strength of the tenant
- The landlord’s short-term and long-term plans for the building
- And many additional items…
Several of these considerations are specific to spaces for healthcare tenants, highlighting the need to be represented by a real estate professional with expertise in healthcare.
Landlords and listing brokers will often tell healthcare practices they are getting the best possible lease rate and terms for their space. However, this is rarely the case for healthcare professionals who are unrepresented or are solely looking at lease renewal terms and haven’t thoroughly evaluated the open market.
Most healthcare providers make the simple mistake of assuming that if they are in a building they like, then they must be receiving a ‘fair deal’. The reality is, most healthcare professionals are paying much higher than they should be and are leaving large amounts of concessions on the table during lease renewals.
Compounding this further is when landlords or listing brokers attempt to convince a tenant they are not allowed to negotiate their lease terms, tenant improvement allowance or for free rent.
Number 3: Your Lease Renewal Is Negotiable
Most leases provide an option for the tenant to renew their lease when it expires, and may even detail the exact terms of the renewal. However, it is important to understand that your lease renewal is negotiable; even if you have lease renewal terms specified in your current lease that outline items such as the length of lease term, lease rate and annual increases.
The lease renewal option is just that, an option. If the option contains economic terms that are competitive and fair for the ‘then-current market’, exercising or agreeing to the renewal terms without negotiating may be an acceptable process.
However, if the lease renewal terms are less favorable than if you negotiated a new deal, don’t be fooled by a landlord or listing broker trying to convince you otherwise. When a party who is on the opposite side of a negotiation tells you that you can’t negotiate, refuse to be taken advantage of. Hire representation and ensure your interests are first and protected.
If a landlord wouldn’t accept a ‘below-market’ deal… why would you accept an ‘above-market’ deal?
A landlord who says you cannot renegotiate the terms for your lease renewal is hoping you roll over and not push back in order to keep you paying more. They would much rather you exercise the option to renew your lease instead of negotiate new lease terms.
The only way to be certain you have the best possible terms for your lease renewal is to compare those terms with other viable options in your current market. This vital step is often missed by healthcare professionals entering the lease renewal process alone. An expert agent will be able to provide you with a free evaluation and ensure you understand the terms you ultimately decide to move forward with are in the best interest of you and your practice.
Part 4: There are almost always additional real estate options to consider for your practice
Most commercial real estate landlords want you to believe that their property is the only suitable location for your practice, both for a new lease and especially during lease renewals. The truth is there are likely several additional properties that would fit the needs of your healthcare practice and you should thoroughly evaluate each one. Once you fully understanding all your top real estate options, the landlord should then compete to keep you in their building, not vice versa.
Many commercial real estate landlords will take the approach that you don’t have any other real estate options to evaluate and are only negotiating with them. To receive the most competitive terms possible, you can’t downgrade your strategy to this approach. You must understand and evaluate your options.
Additionally, many commercial real estate landlords want you to believe they have several potential tenants ready to occupy your medical office space if you don’t take it. This position is used to force a tenant to rush into signing an unfavorable lease, when in fact, it usually takes months or years to fill a vacant commercial space.
When you compare the default rate of a healthcare professional to traditional businesses, healthcare practices have some of the lowest default rates of any industry and are extremely desirable tenants for most landlords. If landlords are being honest, most would much rather have a healthcare provider because of their success rate over many other types of tenants.
Every leasing situation is unique and a healthcare real estate professional who knows your strengths as a tenant along with the current market, can help you understand what type of leverage you have in your next lease negotiation.
Part 5 : What If The Landlord Is My Friend?
Tenants wants the lowest lease rate with the highest level of concessions, whereas the landlord will push for the highest lease rate and lowest amount of concessions. What complicates this process further for many healthcare tenants is when the landlord has become more than an acquaintance—maybe even a “friend” or a “patient.”
In the game of commercial real estate, one of the landlord’s winning strategies is to leverage their position by becoming patrons, clients or patients of their tenants. This savvy approach provides them an obvious reason to support their tenant’s success, frequent and inspect their properties, and most critical to their own success, to blur the lines of whose side they are really on when it comes time to negotiate the next lease.
This is not to say that a landlord has bad motives and isn’t a genuine friend. Obviously, they could be. But at the end of the day, friend or not, patient or not—landlords must protect their own interests, livelihood, profits, business partners and family in the same way that healthcare practice owners must.
Whether a landlord is your patient, a golfing partner or just sends you a Christmas card, your friendship must be filtered through the competitive landscape of the negotiation game itself.
To enter negotiations confidently, while avoiding stumbling blocks, there are a few things you should consider:
1. Evaluate Your Friendship With The Landlord
You could say there are three types of friendships.
Friendships For Utility: These are casual relationships based on each party helping the other in some way. Most business friendships fall in this category as they’re purely for networking and mutually beneficial business gain.
Casual Friendships: A more personal relationship where each party genuinely enjoys spending time with the other. They can exist solely around shared interests and don’t need business interaction or incentives to survive. However, once the shared interests come to an end, often times so does the recurring interaction or friendship.
Friendships For Life: These relationships function on a deeply personal level. Changes in life circumstances, hobbies, location, career, etc. do not impact the longevity of these friendships.
Most business relationships, and specifically landlord-tenant friendships, are those of utility – mutually beneficial for business.
2. Recognize What Your Friendship With The Landlord Could Cost
The reality is that when a friendship with a landlord (no matter what type) becomes a prohibitive factor in negotiating a lease, the tenant is at great risk of giving away free money (often tens of thousands of dollars). A relationship between a landlord and tenant becomes prohibitive and costly when the tenant assumes any of the following of the landlord just because of their “friendship” or “patient relationship”:
- That they’ll automatically receive a below market lease rate
- That the landlord will offer aggressive or generous concessions
- That the landlord is looking out for the tenant’s interests
- That the lease renewal option in the master lease is fair or competitive for today’s market and doesn’t need to be negotiated
- That the terms secured on a handshake agreement are sufficient and there’s no need to otherwise document them in a fully executed lease
- That a month-to-month lease would be sufficient enough to guarantee any future occupancy or terms
- That they won’t be evicted or replaced by a new tenant
- That there’s really no need to use a broker to negotiate a new lease or a lease renewal
- Or that there’s no need to use a lawyer for lease review
So, how to win in negotiations and maintain your relationship?
The most proven and professional approach for a healthcare tenant to achieve his or her objectives, avoid being taken advantage of, and maintain a good relationship with the landlord is to hire an experienced healthcare real estate agent for representation in a lease negotiation.
An agent can help by competitively procuring lease terms from other viable options in the market and create a posture for the tenant that incentivizes the landlord to sharpen his or her pencil on terms. This is in stark contrast to when a landlord knows the tenant won’t move and therefore has no reason to offer any concessions or to lower the lease rate.
But this is where the internal conflict exists for many tenants. Some tenants believe that involving a broker could backfire by irritating the landlord, hurting feelings, or causing a landlord to feel disrespected—resulting in worse terms created out of spite.
These beliefs are rooted in fear, not reality. Professionals and friends alike can and should engage the support of experts to handle their business. It’s not an insult to a relationship. In fact, it protects the relationship by keeping the tenant and landlord at arm’s length while negotiating and creating a buffer for emotions that could be damaging to achieving the best possible outcome.
This is not to say that a landlord won’t use emotional manipulation to intimidate a tenant. Many landlords do, and when doing so, their hope is that the tenant is too uncomfortable to bring in an expert advisor who can show what other competing properties are willing to offer, what it looks like to achieve the most favorable terms, and most importantly, how to avoid being taken advantage of. Additionally, when an experienced agent has the market data to back up the requests being made on behalf of the tenant, it often removes the landlord’s emotions from the negotiations, as they know at that point they have to be competitive.
Friendships between tenants and landlords do not have to disintegrate during negotiations. And they don’t have to expose tenants to vulnerabilities. If the negotiation is handled professionally and respectfully by a healthcare real estate broker, the process should not fracture any relationship with the landlord. And if it does, then the landlord likely was never a friend to begin with.
Remember, it’s more important to protect your interests and future profitability than it is to cater to the feelings of your landlord. There is nothing wrong with wanting to achieve terms in your favor, in the same way as the landlord wants terms in their favor. The way to respect the relationship and avoid costly mistakes is to hire representation to serve your interests throughout negotiations.
conclusion
Navigating commercial real estate is a high-stakes endeavor—especially for healthcare providers who often face unique challenges and misinformation from landlords and their agents. This guide has outlined six critical truths that every healthcare tenant needs to understand.
- You have the right to representation. Landlords may attempt to intimidate or mislead you into negotiating without an expert by your side. Don’t fall for it. Just as you wouldn’t expect a landlord to perform their own medical procedures, you shouldn’t go into lease negotiations unrepresented.
- Your current lease likely isn’t the best you could have. Many tenants overpay and miss out on valuable concessions simply because they don’t evaluate the open market or rely too heavily on landlord claims. With proper representation, you can ensure your lease reflects true market value.
- Lease renewals are negotiable. Even if your lease has a renewal clause, you are not obligated to accept it without question. Evaluating other options and negotiating with data-backed insight can lead to dramatically better terms.
- You likely have more options than you think. The idea that your landlord’s space is your only viable option is often a myth. Competitive leverage comes from understanding the full range of properties that meet your needs.
- Even friendly landlords are running a business. Relationships with landlords—whether friendly, long-standing, or even clinical—should not interfere with professional lease negotiations. Respect and professionalism are preserved, not threatened, by bringing in expert representation.
The bottom line: Your real estate decisions directly impact your financial success, long-term stability, and practice growth. With professional representation, a strategic approach, and a clear understanding of your rights, you can secure terms that protect your interests and maximize your opportunity—regardless of who the landlord is.