Empowering Tenants

By Peter Pana - Tenant Advocate - Leasable.net.au

It almost goes without saying that tenants need a complete picture of what is waiting for them around the corner before they make a leasing decision. The less complete the picture the more risk the tenant takes on.

Lurking in the dark corners is one of the biggest unknowns, the cost of the build. Whilst the cost of fitting out a medical practice by and large depends on the needs, budget and tastes of the tenant, it also depends on the latent conditions of the site and the hidden conditions in the lease.

In building terms, “latent” means something at the site that could not reasonably have been anticipated by a builder at the time of quoting the job. Lease wise, a hidden condition means a clause in the lease whose operation is not immediately apparent but increases the effective cost of the build to the tenant.

The ability to anticipate, identify and de-risk latent conditions is critical, but the opportunity to move parts of the deal around to soften them evaporates very early on. Right at the start, as the deal is taking shape there is a small window of opportunity for a tenant to arm itself with tactical advice from its design and build team.

Knowing the latent and hidden conditions to look out for, a tenant can extract more high-value concessions from landlords as part of the deal. Those concessions are mostly won or lost before the lawyers get involved.

Because of this, a tenant should be alert to two tell-tale signs of manipulation in the leasing process. The first is if the tenant is encouraged to delay getting advice from its design/build or legal team. The second is an attempt to lock in agreement on the numbers before supplying complete premises plans and building information.

It follows that a tenant should be slow to agree on the financial aspects before consulting with its build team.

The power to keep landlords honest and pliable comes from getting the right tactical advice early. Increasing tenant awareness and confidence is a necessary part of preparing to negotiate and an essential component of a client-builder relationship.

The application of leasing laws and practices varies widely. This article is not legal advice. Tenants must rely on independent legal, financial and business advice from suitably qualified professionals.

Contact leasable now for a free 15 minute discovery session on how to better prepare for your next lease negotiation.

Peter Pana
0414 257 298


For more insights into healthcare leasing, visit Leaseable.net.au