MedEsthetics magazines offers business education and in-depth coverage of the latest noninvasive cosmetic procedures for physicians and practice managers working in the medical aesthetics industry.
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LEGAL ISSUES additional charges. You should read the lease carefully to understand exactly what your total costs will be. Most leases require tenants to pay a portion of the real estate taxes. These are usually called escalations, which require you to pay a percentage of the increases in the landlord's costs over a base year. The devil is truly in the details of these complicated increases. You should only have to pay a percentage of these costs commensurate with the percentage of the building your space represents. If the landlord successfully challenges a real estate tax increase, you should get the benefit of that too. Repair obligations can be significant costs. If you install an air conditioner, you probably expect to maintain it, but if the landlord supplies the air conditioning, you should read the lease carefully to see if you have to pay to maintain the equipment. You may persuade the landlord to change that Sundays. The same applies to the freight elevator, which may not be available early mornings or during the evening. If you will require these extra services, it is important to get a schedule of fees. On the flip side, you should make note of the services that the landlord has agreed to provide. If the lease says the landlord will clean shared bathrooms every night, then you should not hire your own cleaning service for that. 5. Who Handles Buildout? You will probably spend a lot of effort negotiating who will perform and who will pay for any construction needed to get the space ready for your occupancy. If the landlord performs the work, your rent will likely start when the work is completed. If you do the work, you will probably have a set date when you have to start paying rent, even if the If the landlord is using the utlility charge as a profit center, you may be able to negotiate more reasonable treatment. during lease negotiations. If you aren't successful negotiating, then you need to evaluate the cost of the space when you add in the expected repair costs or the costs of a maintenance contract. 3. What Will Utilities Cost? Electricity costs are described in detail in commercial leases. Sometimes electric usage is submetered, which means that each tenant has its own meter, and the electric charges are based on each tenant's actual use. Other landlords may charge for electricity based on the square footage in each unit plus a percentage of the common areas. Still others include the electricity costs in the base rent, but charge for cost escalations over the base year. These terms typically are not negotiable, but once again, you need to understand exactly what you will be paying for and make sure your percentages are fair. Each of these methods of paying for electric usage gives the landlord an opportunity to make a profit. If the landlord is using the utility charges as a profit center, you may be able to negotiate more reasonable treatment, but you will first have to dig into the payment terms to understand them. 4. What Isn't Included? Many commercial leases do not include all the services you will need. For example, if your space is in an office building, the landlord may not supply heat and air conditioning on 24 JANUARY/FEBRUARY 2014 | MedEsthetics work is not complete. If the landlord is paying part of the construction costs, then you may be reimbursed after your contractor states in writing that he or she has been fully paid for a portion of the work and agrees not to file a lien against the building for that work. How much your landlord will pay, whether the landlord's contractor has to do the work, whether you must use union labor, and when the landlord will reimburse you are all important issues to negotiate thoroughly in the lease. Incorporate a statement of the work to be performed into the lease, including architectural plans, lists of the fixtures with make and model numbers, and quality standards for the work and materials. The construction plan deserves attention in the lease commensurate with its importance to your business. 6. What Insurance Coverage Will You Need? Landlords typically require their tenants to carry both property and liability insurance. Property insurance covers the tenant's interest in the building and any improvements, such as built-in lighting. Liability insurance covers injuries to others or damage to other people's property caused by the tenant's negligence. Your insurance broker should be involved as soon as you see a copy of the draft lease to guide you to the correct package for your practice. This is another annual cost to factor in when determining if the lease is right for your business.