Dr. Sara M. is a 65 year-old veterinarian with a Premier Spay and Neuter Clinic in Parma, OH. Although the doctor was in the later stages of her career, she had no plans to retire or sell the clinic in the near future.
The doctor’s clinic lease was approaching its expiry date, and although she’d had various disagreements with her landlord over the course of her tenancy, she wished to remain in the space and renew the lease for another term.
When Dr. M. first built out her clinic nine years ago, the landlord had agreed to a reduced rental rate due to the struggling economy. Nine years later, after approaching her landlord to discuss the terms of her upcoming lease renewal, she was horrified to learn that they’d be increasing rents to match market
value, necessitating a large and unanticipated increase in expenses that she wasn’t prepared for. Would she be forced to close her practice, or uproot her clinic and relocate to a space with lower rental rates?
At what seemed like perfect timing, the doctor received an email communication from Cirrus Consulting Group regarding their tenant representation and office lease negotiation services for veterinarians. The doctor reached out to Cirrus and retained them for her lease renewal negotiation. She was looking for the following key “wins” in the negotiation:
- Affordable rental rates and fair economic terms.
- Location protection and security.
- Minimized personal risk and low exposure.
- The flexibility to eventually transition and sell the clinic to a future buyer, profitably, and smoothly.
Cirrus represented Dr. M. by carefully understanding her short and long-term clinic goals, and together, they achieved the following key “wins” in the negotiation:
- Secured a 10-year lease agreement with a 5-year “Option to Renew”.
- After tedious back and forth negotiations, a consensus was made on rental rates that satisfied both parties: Cirrus was able to negotiate lower rental rates for the doctor, with gradual increases over the course of the term, saving Dr. M. $15,000 in rent from years 1-8. Increases for years 9-10 are based on market value.
- Adjusted “Surrender” language to state that Dr. M. will not have to restore the space back to its original vanilla shell upon vacating the premises. It’s not uncommon for the demolition of a clinic to cost over $100,000 in unexpected costs.
- Added “Death and Disability” protection for Dr. M. In the event she is unable to work due to death or disability, the doctor, her family or estate, can terminate the lease with 12 months’ notice. Prior to this clause, Dr. M. and her family/estate would be left paying off the practice debt until the end of the term, easily costing over $100,000.
- Amended “Exclusivity” language to prevent her landlord from moving other veterinary professionals into the building.
- Amended the “Relocation” language, limiting the landlord to two relocations throughout the term. In the event of a relocation, the landlord must cover all moving costs, saving Dr. M. from $200,000 or more in potential moving expenses. Further, the new location must be comparable to the existing space, and, the doctor shall not be required to move until the new space is operational.
- Amended “Permitted Use” language to include “related veterinary services”, allowing Dr. M. to expand her services by bringing in groomers or other veterinary specialists without landlord interference.
- Added language allowing Dr. M. to close the clinic for “a reasonable amount of time” for vacation or illness, without defaulting on the lease.
“My Cirrus lease negotiator negotiated reasonable rental rates, and obtained agreement from the landlord for many of our suggested lease amendments. Even when the landlord was tough, my negotiator handled them well to achieve what we set out to do. I’m grateful that I didn’t have to deal with my landlord, and let Cirrus do the work while I focused on my clinic.”
– Dr. Sara M., DVM | Parma, OH