My veterinary practice survived a land grab

I opened my first practice, St. Louis Cat Clinic, in 1992. The location was great. The clinic was nestled in a strip mall with a popular auto repair business on the corner and apartments, a restaurant, and a military recruiter in the back. Across the street, at the intersection of two busy roads, was an even larger shopping center, complete with a national-chain pharmacy, a grocery store, a medical building, and a JCPenney.

The building itself was a winner, too—and a steal. Our leasehold was built with a basement equal in size to the main floor, but we paid rent only on the square footage of the first floor. Of course, I built everything out.

5 lessons in fighting back

We opened with just three patients: my own cats. Seven years later, St. Louis Cat Clinic had grown into a successful business with 3,000 clients and nine employees.

What a great spot. Too bad we couldn't stay.

WATCHING FOR BAD SIGNS

The day after New Year's in 2000, I was chatting with a fellow shopping center tenant, the owner of a religious clothing and retail store. He told me that his request for a 10-year lease renewal had been denied and that his store was now on a month-to-month agreement. The agent for the leasing management company had told him a commercial developer wanted to tear down our shopping center and build a pharmacy on the corner.

Not too long after that, I found out that a second business owner in our strip mall had been put on a monthly lease. Then a neighboring attorney retired and vacated the center, but no "For Lease" sign appeared in the window. No one called the current tenants to explain what was going on. The leasing company was silent, and I was worried.

REACHING OUT FOR HELP

I knew that if a developer was making big plans for this busy intersection, the local government would have to know about it. So I called the ward alderman of my district for information. What was going in on our corner, and when was it going to happen? He denied any knowledge of a commercial redevelopment project at the clinic site. I attended a meeting of the local Small Business Association. The featured speaker was the president of the board of aldermen. I asked him about the rumored redevelopment project. He hadn't heard anything, he told me.

The denials only made me more nervous. I felt a sense of impending doom. But I took action and wrote a letter to my clients about the rumored redevelopment. I asked them to call and write letters to their ward aldermen on behalf of the clinic. Many of them did, questioning their local representatives about the plan and asking to keep St. Louis Cat Clinic in their area. But my clients received the same denials: There was no project planned for the site.

By this time, reporters had started asking questions. Articles appeared in the newspaper. But the ward aldermen continued to deny any knowledge of the redevelopment. It was a broken record I thought would never stop skipping.

At last, one year after the rumors first started, the development company acknowledged the redevelopment plan. The president of the development firm said the current tenants would be taken care of, but I didn't receive any kind of an offer.

LOOKING INTO THE LAW

It was time to talk to my attorney. I told him the clinic had a 15-year lease with seven years remaining on the leasehold space. He told me there was nothing I could do: Just accept the month-to-month rental—and the eventual loss of my practice.

Luckily, one of my clients came through. During an appointment while I was examining his cat, he mentioned that he was an attorney and listened to my situation. "Hire me," he said. That was the turning point.

My new attorney recommended a proactive approach, but things weren't looking good. Clients who lived in the apartments behind us were being pushed out, and that building sat empty. The businesses in the strip center were following in their wake.

DECIDING TO FIGHT

Soon my new lawyer gave me great news—emptying shopping center aside. Luck and the Force were with me. The city wasn't condemning the building or taking over the property by eminent domain. That meant the development company would have to buy out my lease under leasehold law.

I was in my 50s by this point, and I decided I wasn't going to borrow money from a bank—and go into debt—to move my clinic. I would get that fair buyout from the development company or go down fighting. If I lost everything, I planned to sell off all of my practice's veterinary equipment and get a job as an associate again. All or nothing. I felt free.

WAITING IT OUT

If I received a fair buyout from the development company, where would I relocate? I turned to local agencies. I called the city's small business development office. No, they didn't have programs to offer me advice, help me relocate, or obtain financial assistance. But one of the office's employees did later visit me in the clinic to let me know he was there to help me. He gave me a list of other locations for lease in the area. Big whoop—I could get that information by calling a commercial real estate agent, looking in the newspaper, or getting in my car and driving around the neighborhood.

While I searched for answers and waited for a relocation offer from the development company, the president of the surrounding neighborhood association told me City Hall wasn't happy with me for holding up the process. But my attorney and I were trying to move things along. My lawyer repeatedly contacted the development company detailing its responsibility to buy out my lease. I put together a proposal for the buyout amount and asked for six months to move. For two years, we didn't receive a single offer or counteroffer.

I kept practicing in the emptying strip mall. Remember that auto repair business on the corner? Its owner had enough leverage to negotiate for a new building next to the future pharmacy. However, the development company president made it clear that he wouldn't be building retail space on the land for us. He finally coughed up a small offer for relocation. It didn't come close to covering the value of the lease or moving costs, but the restaurant owner behind the clinic took a small buyout and left. Then the army recruiter was gone, too.

REWARDING PATIENCE

In retrospect, I can see that St. Louis Cat Clinic was in great shape to fight this fight. My practice had a financial cushion and good cash flow, I found a great attorney, and we were blessed with wonderful employees and clients. Over years of no offers, I learned that most developers expect to wear out tenants. I also learned that, in city politics, small businesses are expendable. Neither city politicians, the local Small Business Association, the neighborhood association, nor the city development office were interested in helping a small veterinary practice obtain a lease buyout and relocate to another site in town.

In August 2002, the development company finally offered a substantial amount for a buyout and one month to move. We met face-to-face with the president of the company. While he explained the offer and told us that, of course, if I needed more time to move, then he would be willing to provide more time for a decrease in the buyout money, I jumped in: "I accept the offer and one month to move." The president of the development company squinted his eyes and said to me, "People at City Hall have called you greedy." I laughed. So much for confidential negotiations! I'd spent my time wisely and secured another location. My architect was working on the plan, and I had one month's free rent and a place to park my practice for 30 days while my final location was finished.

Ultimately, I think my husband, my attorney, and the developer were all surprised at my success. After three years of uncertainty, wrangling, and pressure, I negotiated an excellent lease buyout that covered the costs of moving, new equipment, and the build-in of a new larger facility at a great new location.

But I didn't do it alone. Friends, family members, employees, and clients showed up with pickup trucks and tools on the day of the move and worked with me to transport everything and put items away in the new and improved clinic.

Today, St. Louis Cat Clinic is a two-veterinarian practice with 13 employees. I took a big risk by taking on a big developer, but it worked out.

Dr. Joan Freesh owns St. Louis Cat Clinic in St. Louis. Send questions or comments to ve@advanstar.com.