What If My Commercial Real Estate Landlord Is Also My Patient?

How do you handle a commercial real estate negotiation if your landlord is also your patient?

How does a healthcare tenant obtain the best terms possible for their practice without losing the landlord as a patient?

Many healthcare tenants find themselves in this situation when approaching a lease renewal or relocation. It can be an uncomfortable situation for any doctor, especially since most healthcare professionals (and most people in general) would prefer to avoid conflict or confrontation.  So how do you, the healthcare tenant, obtain the best terms possible for your practice without upsetting your landlord and risk losing them as a patient?  Let’s answer that question.

In an ideal world, you could tell someone exactly what you hoped to achieve and expect to receive a fair response. Unfortunately, commercial real estate is not one of those worlds! Leases are how landlords make money. They want to maximize their income, net worth and profitability the exact same way you want your practice’s profitability to be maximized.   To be clear, the stakes are very high for both parties.

The difference between a properly or poorly negotiated lease or purchase contract can benefit or cost you tens to hundreds of thousands of dollars over a ten-year period. Understanding how much is really at stake for a healthcare provider during a commercial real estate negotiation changes how you should approach every transaction.

To help your perspective, look at these foundational questions:

  • Do you realize your landlord’s objective is to maximize their investment and achieve the highest returns?  Meaning, their goal is to get you, the tenant, to pay as much as you can for your space. The higher the rent, the higher the landlord’s profitability.
  • Do you realize that just like your landlord comes to you for healthcare services because they are not trained in your specialty, that you should follow the same approach and go to others that are trained in specialties that you are not trained in, such as commercial real estate?
  • What is more important to you,  losing your landlord as a patient or overpaying on your space by tens to hundreds of thousands over a ten-year period?
  • Is your landlord your patient because they are trying to get away with overcharging you? If so, do you really want them as a patient?
  • Is the landlord’s listing agent your point of contact? If so, then you need to know it is against most state’s real estate laws for that listing agent to give you any advice that would give you an advantage in negotiations?
  • Do you know that the listing agent is hired to protect and advocate for the landlord, not you?
  • If your landlord has been getting away with overcharging you for years, do you expect them to voluntarily cut their profit by tens of thousands of dollars without a fight? Or just because you ‘hope’ they will give you a ‘fair’ deal?

Nearly every major corporation in the world utilizes trained specialists that negotiate professionally for a living to handle their commercial real estate needs.  That being the case, why would you assume you could achieve better results yourself against the landlord or their professional negotiators?

  • Do you have the resources and ability to dedicate dozens of hours to fully comb the market, understand all your top options, obtain and organize data and then execute a strategy to maximize your profitability?
  • Do you understand that hiring representation will remove you from conversations with your landlord and increase your ability to maintain a healthier relationship when the negotiation is complete?

Conclusion: Most landlords will respect a person who realizes they are not professionally trained in commercial real estate, especially when a large amount money is at stake. Any landlord who tries to convince a tenant not to hire representation isn’t looking out for that tenant, they are looking out for themselves. Telling a doctor or office administrator that they should operate outside their expertise should be seen as ingenuine, deceptive and untrustworthy.

If a landlord would not perform their own healthcare, why would a healthcare professional try to negotiate their own commercial real estate terms?  Representing yourself against a landlord and / or listing agent who is trained to negotiate professionally and who’s objective is to make as much money as they can is reckless, especially when there is so much money and liability at stake?

Most landlord’s definition of a market lease rate is the highest they can get a tenant to pay.  That should open the eyes of healthcare professionals to realize they need help if they are going to achieve the most favorable terms possible.

Whether you intend to renew your lease, purchase your property or relocate… do yourself, your staff, your patients and everyone tied to your practice a big favor. Take the same approach to maximizing your profitability through real estate that the most successful companies in the world do. Hire professional representation and then execute on a real strategy… whether your current landlord or future landlord is a patient or not.

CARR Healthcare 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. carr.us

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