When it comes time to renewing commercial leases, should existing massage therapy tenants simply accept the same terms and conditions from their landlord? No. With effective negotiation, massage tenants can receive additional tenant inducements from the landlord, have their deposit refunded and reduce their monthly rent.
Routinely, I field questions from frustrated massage tenants asking me for help. With help from a lease consultant, these points can be achieved.
Renewing with no deposit. If your lease agreement requires you to make a deposit for the initial lease term, it is not acceptable for that deposit to continue indefinitely. Ask yourself, are you a security risk? Have your rental payments been on time? If so, resist ongoing security deposits and make sure you state this amendment in the renewal document. Otherwise, your deposit may go on forever.
Lease renewal allowances. Massage therapy clinic owners often don’t think they can get a tenant allowance on their renewal term. If the landlord is giving allowances to new tenants moving in, then why can’t you get an allowance, too? Even if your clinic space only needs cosmetic upgrades, such as new carpeting or a fresh coat of paint, negotiate it as part of the renewal deal. After all, your tenancy is proven, plus there is less risk for the landlord to put cash into your renewal than take a chance on a new tenant.
Ask for more than what you want. I recall one tenant who came to me hoping I could negotiate a $500 per month rent reduction for her business. During the ensuing months, I met with the landlord and insisted upon a $1,000 per month rent reduction. Eventually, my efforts paid off with an $800 per month rent reduction (a 25-percent reduction). Ask for more than what you want when renegotiating other terms, too, like free rent, additional signage, leasehold improvements, etc. The worst your landlord can do is say “no.”
Negotiate renewal option(s). Don’t forget to negotiate your renewal option(s) and specify that it be assignable. Some leases state renewal options cannot be assigned or transferred, thereby potentially making it more difficult for you to eventually sell your massage therapy clinic. Stating that the renewal option be up to five years (for example) will give you more flexibility if you want to renew for only two more years, instead of a full five years. Renewal option wording can be tricky, so please read it carefully.
Reduce your square footage. Some massage tenants suffer from leasing too many square feet. For some massage therapists, a reduction in their leased area now, at renewal time or by simply relocating to a smaller space at renewal time will help solve this problem. With a proper space plan, massage tenants can reduce their area by 10 to 30 percent with minimal inconvenience. This reduction in gross rent could justify the process.
Renewal rent reductions. Achieving a rent reduction on your lease renewal is a real possibility. If the landlord is leasing space to new tenants at less than you are currently paying, then a rent reduction should be given to you. If your current rental rate is artificially high because of your last tenant allowance, a rent reduction could be in order. Do your homework and talk with other tenants who have recently renewed to see how much they are paying.
Dale Willerton is The Lease Coach and a senior lease consultant who works exclusively for tenants. He is a professional speaker and author of Negotiate Your Massage Clinic Lease or Renewal. For a free CD titled Leasing Do’s & Don’ts for Massage Clinic Tenants, e-mail DaleWillerton@TheLeaseCoach.com. For more information, visit www.TheLeaseCoach.com and www.HelpULeaseMassage.com.