Navigating the commercial real estate market as a healthcare provider can be a daunting task, whether you’re looking to scale your practice, purchase or lease a new office space, or negotiate a renewal. The importance of a real estate strategy to your practice’s success should not be understated—it’s a significant decision and the second-highest expense behind payroll for most practices. With nearly 80% of practices leasing their healthcare space, far too much money is being left on the table at negotiations.
Beyond your monthly rent, consider what’s also at stake when signing or renewing a lease: tenant improvement allowances, free rent, annual escalations, and more are all negotiable and can cost (or save!) a practice tens of thousands of dollars over a lease term.
It’s why successful healthcare professionals aren’t negotiating leases without the help of agents who work to protect what you’ve earned. And luckily, the financial responsibility of hiring an agent does not land on you the tenant. It’s an important commercial real estate industry standard that means hiring someone to represent your needs as a healthcare provider comes at no cost to you in the majority of scenarios, as the commission is paid for by the landlord. Here’s what else you need to know about tenant representation.
While understanding nationwide and industry-specific trends is helpful when choosing an office space, real estate is local, which means agents tied into your regional or state-wide market have an understanding of the landscape, of things that influence real estate dynamics and decision-makers, of available vacancies, of recently completed transactions, and of future spaces that may be available soon.
The majority of this information is not public record, nor is it readily available to compile, but expert real estate agents can provide this at no charge. Market knowledge ensures you’re not only getting the best space for your practice, it also ensures you don’t overpay. Agents provide that assurance, along with guidance when choosing location, evaluation of market conditions, analyzing purchase vs. lease comparisons, timeline management, and negotiating the most competitive rates and terms.
In order to provide top-level lease negotiations, a full market evaluation is necessary. That means your agent should be negotiating on three to four properties simultaneously in order to offer a side-by-side comparison, and view of availability, even if you plan to renew your lease.
Why? It’s a powerful tool for negotiation and healthcare providers should never settle for less. Leveraging a local real estate professional’s expertise yields consistently more favorable terms for a tenant than simply asking for a lower price. When you have multiple offers you’re willing to pursue (even in a renewal negotiation), you’re creating a strong posture that doesn’t include bluffing or threatening. Instead, it creates an environment where landlords compete to attract and retain quality tenants.
If an agent has listings within the market you’re looking or if they have a listing agreement with the landlord, it’s an immediate conflict of interest as they’re financially incentivized to lead you toward their listings and/or maximize the landlord’s profit. Additionally, it’s not possible to fairly represent the interests of competing parties in the same transaction — a landlord and a tenant. To ensure you’re being advocated for, always look for agents who strictly represent buyers or tenants. This not only means more aggressive negotiation by the agent, it also means tenant-specific solutions are on the table, such as lengthening build-out periods, free rent concessions, or greater tenant improvement allowances specifically for your practice.
Sure, many basic lease deal points might look similar across the real estate industry but healthcare differs. Healthcare-specific real estate agents work within and understand a healthcare provider’s world, from a real estate perspective. They should have familiarity with the healthcare industry, whether it’s the office space needs of a general practitioner, ophthalmologist or dentist. From zoning, parking requirements, assignment and exclusivity language, etc., a healthcare specific negotiation looks dramatically different than a standard office or retail user. And that is why having an expert in your corner, with experience, is a winning strategy.
Healthcare clients are some of the most desirable tenants, and specialized agents have the ability to leverage that value to shift savings by significant amounts of money. If you’re on schedule to renew your lease or plan to look at new spaces for your healthcare practice, consider hiring a healthcare real estate agent to ensure your needs are represented.
CARR is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, thousands of healthcare practices trust CARR to achieve the most favorable terms on their lease and purchase negotiations. CARR’s team of experts assist with start-ups, lease renewals, expansions, relocations, additional offices, purchases, and practice transitions. Healthcare practices choose CARR to save them a substantial amount of time and money; while ensuring their interests are always first.
Visit CARR.US to learn more and find an expert agent representing healthcare practices in your area.