Animal Health Solutions

36 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | northamerica.covetrus.com Gutting your practice from the inside out Another such "hidden cost" is in the surrender clause. You've spent years designing your space and investing money into it, only to find that at the end of your tenancy, the landlord requires you to rip it all out, costing you tens of thousands of dollars in demolition costs. Not only that, but lurking in that clause could be the landlord's ability to claim ownership of your trade fixtures at the end of the term. In other words, your veterinary equipment could be taken away from you upon practice exit – another loss of tens of thousands of dollars. Unexpected clinic relocation/demolition by the landlord Hidden costs may also be hiding in a relocation or demolition/redevelopment clause in your office lease. These clauses are increasingly common. Imagine a scenario in which you've built out your beautiful veterinary clinic, invested hundreds of thousands (maybe even a million) dollars into its design, and then the landlord exercises their right of relocation. They want to move you to another part of your building, and they want to do it within 30 days, and they want you to pay to build out your space…again! Unfortunately, this horrifying scenario is not uncommon for veterinarians. And as if it couldn't get any worse, the demolition or redevelopment clause could also be hiding in your lease. Imagine you've invested all that money into your space only to find the landlord wants to knock your building over to put up a condo tower. In this case, you're out on the street, and the landlord isn't obligated to pay you a dime. You now have to find another office and start all over again. Both scenarios can cost you hundreds of thousands of dollars. Veterinary clinic rent is an "obvious expense" As a veterinarian, it is important to understand that there is much more to a veterinary office lease negotiation than just rental rates. Rent is an obvious expense, but there are hidden expenses lurking throughout your office lease agreement. Assignment, surrender and relocation/ demolition/redevelopment clauses are just some of the dangers hiding in the standard form lease. Even if you are happy with your rental rates, it's important to pay attention to other, often more important, terms in your lease agreement. If you feel your rental rates are unreasonable, it is important to discuss this with your landlord; however, this should not overshadow the other issues in your lease. Cirrus Consulting Group takes a holistic approach to veterinary office lease negotiations to ensure we tackle everything, including rent, without considering one to be more important than the other, because, it's not just about the rent! About the author Eric Pook is the President of Cirrus Consulting Group, North America's preeminent commercial real estate and office lease negotiation firm for veterinarians. Eric has been consulting small businesses since the late 90's with an emphasis on revenue creation and cost mitigation. Eric advises doctors each day on how to successfully leverage the veterinary office lease agreement to maximize practice value while reducing risk and liability. You can contact Cirrus at 1.800.459.3413, info@ cirrusconsultinggroup.com or cirrusconsultinggroup.com.

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