Mahan Law provides advice and counsel to veterinary startups and established practices on a nationwide basis. We are well aware that a key concern for our veterinary clients is securing office space whether through leasing or purchasing a property. Attorney Anthony Mahan regularly collaborates with co-counsel attorneys who negotiate commercial leases and transactions on behalf of veterinarians in real estate markets throughout the country. When you partner with Mahan Law, you will be well-equipped to lease a prime location in which your veterinary practice can flourish.
How Mahan Law Negotiates a Veterinary Lease
At Mahan Law, we are well-aware that landlords prefer lease terms that are favorable to them, however, we also know that everything is negotiable. Our veterinary attorneys will work with you to arrive at a final lease agreement that protects your interests. Although there are no standard commercial leases, some of the key considerations for a veterinary practice include:
The first thing to know is how rent is calculated in commercial properties: there is a difference between usable square feet and rentable square feet. Usable square feet refers to the actual size of the space you are renting. Rentable square feet is a combination of usable square feet and a percentage of the square feet of the common areas (e.g. lobbies, hallways, stairways, elevators). The rate that is quoted for a veterinary space is usually based on rentable square feet.
In addition, rental agreements for commercial property are typically "triple net leases." This means that the veterinary practice will also be responsible for paying taxes, insurance, and maintenance fees of the office space in addition to a percentage of these expenses for the common areas. Finally, it is important to negotiate acceptable annual rental increases and renewal rates.
Because commercial properties are designed for permitted uses in most locations, a veterinary practice must be permitted under local zoning laws, which is another good reason to have an experienced veterinary attorney on your ride. At Mahan Law, our legal team works with title agents and local officials in multiple regions to ensure our clients can establish a veterinary practice in a target location.
If the commercial office space has not been previously leased to a veterinary practice, a buildout or renovations may be necessary. Obviously, this can be costly, however, our veterinary attorneys will negotiate to have the landlord either pay some of these expenses or agree to a short-term rent abatement.
Term and Renewal Options
Because the location of a veterinary practice is critical to its value, it is imperative to negotiate renewal options in the lease. This will allow the practice to remain in the same location the clients have been accustomed to. The lease should also include a provision enabling a purchasing veterinarian to continue practicing at that location.
If the lease is for a unit in a complex with multiple tenants, the veterinary lease should include a provision whereby the landlord agrees not to lease space to competitors. If other veterinarians are practicing in the same complex, you will have fewer clients, which will have a negative impact on the value of your practice.
To protect the value of the veterinary practice in the event of a sale, a lease should also include a provision (1) allowing you to assign it to a buyer before the term expires and (2) releasing you from any liability under the lease after the transaction is completed.
Personal Guarantee in a Veterinary Lease
A veterinary lease may also require a personal guarantee, which makes it crucial to negotiate for both a termination date and release provision.
Option to Buy in a Veterinary Lease
As your veterinary practice experiences growth, there may come a point when owning the building becomes more cost-effective and may potentially add value to the business. Therefore, a veterinary lease should include an option to buy at a price based on an agreed-upon valuation method.
Contact Our Experienced Veterinary Lease Attorneys
As Mahan Law, our practice is dedicated to helping veterinary professionals achieve their business objectives. Knowing that landlords often attempt to charge veterinarians as much rent as possible, we leverage our legal knowledge and negotiating skills to negotiate favorable lease terms. When you become our client, we will always put your best interests first, help you avoid the common pitfalls of renting veterinary space, and work to maximize the value of your veterinary practice. Please contact our office today to set up a consultation.