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Recognize Lease Flaws as Opportunities

Is the glass half full? Is it half empty? Is it about to fall right off the table?!

Like the dilemma of the half empty glass, tenants are often faced with seemingly hopeless lease problems. The tendency is to struggle on, quietly enduring the issue, or worse, spend a great deal of time, money and emotional energy chasing the problem rather than the solution. The challenge is to re-focus and find a new perspective that can present a cost-effective resolution.

The first step is to thoroughly understand exactly what the problem is, and how many strategies are available to neutralize its effect on your tenancy. Next, put the problem into proper context. Perhaps your lease has many positive qualities that you may not be aware of or know how to implement in your current situation. There may be an excellent strategy that could resolve the “problem” – possibly even using an interpretation of the “problem” as the solution!

In any case, you need to carefully review your lease in order to understand what it really says.  The experience and training of a lease specialist can offer a variety of facilities available to counter the problem. Always bear in mind that a limitation may be equally offset by an advantage.

Consider the following examples:

Capitalize on an excellent trade area with a location that has low rent but no signage.

Our client was a tenant with a very modest rental rate located in a small space within a large medical professional building. In choosing the location and negotiating the lease the tenant had assumed that signage would not be an issue, believing that referrals from within the building would generate new patients. Ultimately, there was very little referral traffic and the tenancy was in trouble. Rather than continuing to battle with the landlord and the municipality for that prized sign on the exterior of the building, we encouraged the tenant to allocate funds saved by low rental payments to alternate modes of marketing such as public speaking and an active website. New patient flow increased dramatically and the practice became very successful.

Capitalize on an excellent location with no parking.

Our client was experiencing negative patient growth because their location did not offer parking. This is typical for very high traffic areas. After fighting the landlord for an extended period of time, trying to secure dedicated and cost effective parking spaces, we advised our client to shift focus and try offering a limousine service. The cost was passed on to the patients through a marginal increase in fees and the patients appreciated the service so much they were willing to pay for it! The practice has grown dramatically as a result.

Make use of additional rent and amenities provided by landlord.

A tenant had elected to install their own heating, ventilation and cooling (HVAC) system and services as those provided by the landlord did not meet their needs. Unfortunately, HVAC and related utilities are costs that tenants typically pay for through their additional rent. The two systems competed with each other resulting in a costly inefficiency and the tenant was paying a very high additional rent on top of very high utilities for their own system. A proposal to eliminate all costs for HVAC and related utilities from the additional rent was declined by the landlord but we were able to negotiate and implement an alternate strategy. This involved improving the landlord’s HVAC facilities to make them suitable for the tenant’s use which allowed our client to eliminate their own system and resulted in a savings of almost $2,000 per month!

In summary, enlist the help of an expert whose training and experience will provide you with alternate strategies that can turn problems into solutions.

Written by
Ian D. Toms

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