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Finding the perfect location for your dental practice is crucial for success. However, navigating the complexities of lease agreements can be daunting. That's where WeCare Practice Management steps in! Our expertise in negotiating lease terms and understanding dental real estate in Florida empowers practice owners like you to take control and save money.

Essential Components of Lease Agreements 

Lease agreements are more than just contracts; they lay the foundation for your practice's operations. Understanding the key components is crucial for making informed decisions. Let’s walk you through the essential elements of lease agreements and provide valuable insights to help you make informed decisions: 

Lease Term and Rent Amount

The lease term sets the duration of your occupancy and affects your practice’s stability and flexibility. You generally have two options to choose from: short-term and long-term. 

Short-term leases, lasting less than five years, offer greater flexibility but often come with higher monthly payments. On the other hand, long-term leases, usually 10 years, provide stability and may come with lower rental rates.  

How to choose the right lease term: 

Consider your practice's growth projections and financial situation when deciding on the lease term that best suits your needs. Remember to carefully review the terms and conditions of the lease agreement to ensure it aligns with your practice's objectives and goals. 

Rent Escalation Clauses

Rent escalation clauses are provisions included in commercial leases that allow periodic increases in the base rent over the lease term. These clauses are designed to protect landlords from the erosion of rental income due to inflation and rising operational costs. The common types of rent escalation methods are: 

- Fixed increase 

- Consumer price index (CPI) or cost-of-living adjustment 

- Operating expense escalation 

- Fair market value adjustment 

How to negotiate fair and manageable escalation terms: 

Research the typical escalation methods and rates used in your area for similar properties. This will help you evaluate the fairness of the landlord's proposed escalation terms. If the proposed escalation rate seems excessive, negotiate for a lower rate or a cap on the maximum annual increase. This can help control costs and improve budgeting. 

Common Area Maintenance (CAM) Fees

Landlords charge CAM fees to cover expenses for shared facilities and services in commercial properties. These fees are typically billed in addition to the base rent and can significantly impact your practice's expenses. CAM fees are calculated by multiplying the total operating expenses (property taxes, insurance, utilities, maintenance, etc.) by the tenant's proportionate share. 

Negotiating CAM fees: 

Carefully review the lease agreement to understand which expenses are excluded from the CAM fees. Negotiate to exclude the costs not directly related to the common areas or that provide limited benefit to your practice. 

Tenant Improvements (TI) and Leasehold Improvements

TI allowances are funds provided by the landlord to cover the cost of constructing and improving the leased space to meet the tenant's specific needs. They typically range from $20 to $60 per square foot but can vary depending on the type of space, market conditions, and negotiating power. Leasehold improvements refer to the actual construction and renovation work performed on the leased space using the TI allowance.

Negotiation strategies for TI allowances and leasehold improvements: 

Request a detailed construction bid from the landlord to ensure the TI allowance is sufficient to cover the desired improvements. You can negotiate a higher TI allowance if your practice requires significant improvements, such as specialized medical equipment, exam rooms, or ADA compliance.

Maximize Your Florida Dental Real Estate Strategy Today!

Navigating lease agreements for your dental practice doesn't have to be overwhelming. With WeCare Practice Management by your side, you'll have the expertise and support to make informed decisions that benefit your practice's long-term success. 

Contact us today to learn more about how we can help you master lease agreements and optimize your practice's real estate strategy!