Negotiating Free Rent – For Chiropractic Tenants
August 16th, 2017 - Jeff Grandfield and Dale Willerton – The Lease Coach
Free rent is just one negotiable factor in a commercial lease. To be clear, free rent is a period of time where you are not paying the Base or Minimum Rent (but are, typically, paying your Operating Costs) and you are open for business. Many chiropractic tenants confuse this with a rent free build out or fixturing period when opening a new practice.
This is probably the most unpredictable but most interesting part of the lease agreement we negotiate. Some landlords are quite flexible when it comes to free rent but others are not so liberal. To demonstrate, we remember one tenant we negotiated the first four years minimum rent free (on a 10-year lease). For other tenants, landlords may offer little or no free rent. Free rent on lease renewals is not unreasonable and often achievable – if you know what buttons to push with your landlord.
Negotiate (Ask) for More Than You Expect to Get: Free rent is often one of the easiest concessions for a landlord to make. As a general negotiating rule, always ask or negotiate for more free rent that you need or want. This is especially pertinent if other commercial spaces in the premises are vacant and have been so for some time. Aim for at least one month of free rent for each year of your initial or lease renewal term. But remember to begin your negotiations at more than that. If you begin your negotiations at five month’s free rent, you may be counteroffered three months of free rent.
Negotiate Half Rent Free: Some landlords are very concerned with the lack of cash flow when providing free rent. Suppose you want seven months of free minimum rent but the landlord will give you only three months free. Rather than concede your position, you might counter propose that months 4, 5, 6, and 7 be half rent free; that is that you pay only half the agreed-upon monthly rent. Your landlord may well agree to this proposal! When renewing your lease, you will have more history on your side (you will have a track record of paying your rent on time), so you can easily ask for more. If you are trying to negotiating this, suggest that it be written as a separate condition or concession rather than as actually lowering the rental rate per square foot value. This allows the landlord to have their full rental rate showing on paper, while you get the concession anyway.
Cashing in Your Free Rent: You may find it necessary to raise capital at some time in your practice. If you have negotiated a free rent period for your lease agreement or your lease renewal, it may be possible for you to exchange that free rent for cash. Mind you, there is often a price to be paid! For example, if your rent is $3,000 per month and you have five months of free rent, the cash value is $15,000. However, because this means an outlay of cash for the landlord, he or she may want you to discount this cash value by up to 20 percent. You will have to weigh the pros and cons of your particular situation to determine if cashing in free rent minus a discount for the landlord still makes sense for you and your practice.
For a copy of our free CD, Leasing Do’s & Don’ts for Chiro Tenants, please e-mail your request to JeffGrandfield@TheLeaseCoach.com.
Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.
###
Questions, comments?
If you have questions or comments about this article please contact us. Comments that provide additional related information may be added here by our Editors.
Latest articles: (any category)
Artificial Intelligence in Healthcare - A Medical Coder's PerspectiveDecember 26th, 2023 - Aimee WilcoxWe constantly hear how AI is creeping into every aspect of healthcare but what does that mean for medical coders and how can we better understand the language used in the codeset? Will AI take my place or will I learn with it and become an integral part of the process that uses AI to enhance my abilities?
Specialization: Your Advantage as a Medical Coding ContractorDecember 22nd, 2023 - Find-A-CodeMedical coding contractors offer a valuable service to healthcare providers who would rather outsource coding and billing rather than handling things in-house. Some contractors are better than others, but there is one thing they all have in common: the need to present some sort of value proposition in order to land new clients. As a contractor, your value proposition is the advantage you offer. And that advantage is specialization.
ICD-10-CM Coding of Chronic Obstructive Pulmonary Disease (COPD)December 19th, 2023 - Aimee WilcoxChronic respiratory disease is on the top 10 chronic disease list published by the National Institutes of Health (NIH). Although it is a chronic condition, it may be stable for some time and then suddenly become exacerbated and even impacted by another acute respiratory illness, such as bronchitis, RSV, or COVID-19. Understanding the nuances associated with the condition and how to properly assign ICD-10-CM codes is beneficial.
Changes to COVID-19 Vaccines Strike AgainDecember 12th, 2023 - Aimee WilcoxAccording to the FDA, CDC, and other alphabet soup entities, the old COVID-19 vaccines are no longer able to treat the variants experienced today so new vaccines have been given the emergency use authorization to take the place of the old vaccines. No sooner was the updated 2024 CPT codebook published when 50 of the codes in it were deleted, some of which were being newly added for 2024.
Updated ICD-10-CM Codes for AppendicitisNovember 14th, 2023 - Aimee WilcoxWith approximately 250,000 cases of acute appendicitis diagnosed annually in the United States, coding updates were made to ensure high-specificity coding could be achieved when reporting these diagnoses. While appendicitis almost equally affects both men and women, the type of appendicitis varies, as dose the risk of infection, sepsis, and perforation.
COVID Vaccine Coding Changes as of November 1, 2023October 26th, 2023 - Wyn StaheliCOVID vaccine changes due to the end of the PHE as of November 1, 2023 are addressed in this article.
Medicare Guidance Changes for E/M ServicesOctober 11th, 2023 - Wyn Staheli2023 brought quite a few changes to Evaluation and management (E/M) services. The significant revisions as noted in the CPT codebook were welcome changes to bring other E/M services more in line with the changes that took place with Office or Other Outpatient Services a few years ago. As part of CMS’ Medicare Learning Network, the “Evaluation and Management Services Guide” publication was finally updated as of August 2023 to include the changes that took place in 2023. If you take a look at the new publication (see references below),....
