Rental costs for health services providers have remained stable over the past five years, but can be relatively high for private practices. If you are looking to enter into a commercial lease for your massage therapist business, there are a number of factors to consider as a business owner. Practitioners tend to lease an entire property, a shopfront within a prime real estate location or a room within a larger complex. In today’s market, there is a considerable amount of competition in the massage therapist and alternative medicines industry. Note that through signing an unclear commercial lease or one that is not in your favour; you risk can potentially risk expensive rent or even being removed from a commercial property. Therefore, in order ensure a favourable commercial lease, you should at least be aware of the legal considerations surrounding rent review and any covenants relating to the use of the property.
Reviewing a Commercial Lease
The review of rent can be a stressful time for many businesses, however, there are a number of ways in which you can lessen the burden of this review process upon your massage therapist business. Firstly, you should be aware that almost all commercial leases include a provision for the review of rent. Normally, this will occur every 2, 2 ½ or 3 years. Some commercial contracts will specify that rent will be reviewed annually in conjunction with an objective review process, such as the Consumer Price Index.
In addition, it is possible that the commercial lease that you enter into on behalf of your massage business will contain a ‘ratchet clause’. This is a clause that states that the rent cannot be reduced below the existing rent, regardless of the criteria used to review the rent on the commercial lease. Some business owners find this unfair, and as a result they do not enter a commercial lease, however, you should be aware that in areas of high competition for space, a ratchet clause is considered standard practice.
Finally, when it comes to the review of rent every 2, 2 ½ or three years, both you and the owner of the commercial property will decide upon the mechanism used to determine the new price of the rent. Therefore, it is imperative that you have a mechanism in mind, whether it the profit margins of your business, mean rent price in the area or any other mechanism you deem to be fair. This will ensure the security and profitability of your business massage therapist business for many years to come.
Commercial Lease Covenants
It is important that you are aware of any covenants affecting the use of the commercial property before entering into a commercial lease on behalf of your massage therapist business. You should be aware that it is up to you and you alone to ensure that the commercial property can be used to conduct a massage therapist business. This will require a number of property searches witch you can either perform on your own, or with the assistance of a leasing lawyer. Finally, if there are operating hour restrictions or development restrictions in the commercial lease, ensure that they suit your business practices.
A massage therapy or alternative health therapies practice needs to be highly visible and accessible, preferably in an area with a high number of referring doctors. If you are looking to sign a commercial lease, our leasing lawyers can assist reviewing your lease and ensure your terms are fair – contact us today.