A good commercial real estate deal is about more than just rent. The non-financial terms in your Letter of Intent (LOI) can shape your practice’s future just as much as the dollar figures. Too often, doctors focus on rent and Tenant Improvements while overlooking provisions that directly impact operations, growth, and long-term stability and/or flexibility. Below are a few key terms to pay close attention to before you sign.
Renewal Options and Assignability
Renewal Options: These outline your right to extend the lease and the conditions under which you can do so. Having favorable renewal terms protects your practice’s stability and marketability over time. Without them, you risk losing control of your location once the original lease term ends.
Assignability: This provision dictates whether you can transfer your lease to another doctor or practice in the future. It becomes critical if you are injured, retire, or plan to sell your practice. A restrictive assignability clause can limit your options, while a flexible one provides security and flexibility for the future.
Exclusive Use Provisions and Signage Rights
Exclusive Use: An exclusive use clause prevents your landlord from leasing other spaces in the building to a competitor. This is about more than convenience; it safeguards your livelihood and preserves the value of your practice.
Signage Rights: Your signage provisions outline how and where your practice name is displayed on the building, monument sign, and interior directories. Strong signage rights improve visibility, strengthen your brand, and make it easier for patients to find you.
Parking and Hours of Operation
Hours of Operation: Some landlords impose restrictions on when tenants can be open. For medical practices, this can create serious challenges if your patients need early morning, evening, or weekend appointments. Confirm that your hours align with your practice model.
Parking: The lease should clarify whether parking is first-come-first-serve, reserved, or covered reserved, as well as the spaces’ proximity to your clinic and any associated costs. Parking convenience directly impacts your patients’ experience and your staff’s day-to-day operations.
Final Word
Don’t overlook non-financial terms in your LOI. These provisions influence your ability to grow, attract patients, and preserve value in your practice.
