In a perfect commercial real estate world, shopping center and retail leases wouldn’t be subject to variables that could negatively affect your profitability. In reality, inflation—which is impossible to predict with complete certainty—can affect your bottom line unless you and the tenant agree to use “rent escalation” to keep up with the market. This isn’t as simple as it sounds, though. There are several methods that can be used to ...

By Ellen Siegel, Esq.

Special considerations need to be addressed when a prospective tenant is not a U.S. business or individual. These considerations are geared to ensuring that the tenant and the guarantor, if any, have sufficient assets within the U.S., and that all jurisdictional and choice-of-law provisions provide sufficient protection to the owner’s ability to litigate disputes within the U.S. and applicable state—and the ability to enf...

While the terms of commercial leases will vary to some degree depending on the owners, tenants, and types of businesses involved, most of the same items are on the agenda for negotiations. Renewal or expansion options, common area maintenance exclusions, use clauses, and assignment and subletting requirements are some of the commonly seen issues that get hashed out. But increasingly, tenants are seeking novel ideas for where to set up shop, and so-called commercial cond...

The right to be the only tenant in a shopping center or mall that sells a certain type of product or operates a certain type of business is highly valuable—and, therefore, very strategically negotiated. This right, which is given to the tenant in the exclusive use clause of its lease, can contribute greatly to a tenant’s success at your center or mall, but it has the potential to undermine your own interests if it precludes you from renting space to tenants ...

So they can enforce the lease terms they’ve negotiated with their tenants, office building and shopping center owners build remedies into their agreements. But even though an owner’s remedies can redress many situations, it still behooves you to give your tenant a strong incentive to stick to the lease terms in the first place—especially for big-ticket obligations like paying rent.

It’s not uncommon for tenants to plan to spend more than you’ve agreed to pay for a tenant improvement allowance (TIA). Owners have a dual goal when providing a TIA: It entices tenants to lease the space and, by being updated, the space is more valuable overall. But generally it takes some time—several weeks to several months—to complete a buildout in a commercial space. Ideally, the tenant would complete its improvements, the space would be read...

Operating expenses for an office building or retail property have the potential to make or break an owner’s or tenant’s budget. So it’s not surprising that they’re also a major point during lease negotiations. Your goal should be to pass through in the lease as many operating expenses as you can to the tenant. However, a savvy tenant will try to narrow your list of proposed charges.

 The initially slow-growing movement towards environmental sustainability in past years has become a full-blown way of life for many people, chief among them business owners. In fact, some retail tenants have either staked their business model on being “green” or have improved operations by taking green measures. Some, for example, have encouraged their customers to bring their own reusable bags to stores in return for a small credit.

Shopping centers often have one or more parking areas available for tenants’ customers and employees. Without adequate parking at the property where they rent space, stores and offices couldn’t survive—and owners would lose them quickly. Providing parking seems as though it should be easy—just designate an area where cars can be parked on the property you own. But there are several factors that you need to take into account in order to provide ad...

If you signed a lease with an operating cotenancy clause, you may feel that you’re under pressure to keep the status quo at your center or pay the price by allowing the tenant with a cotenancy right to pay reduced rent or take advantage of other concessions if one or more other tenants close or go dark during the lease term and aren’t replaced within a designated period of time. But you don’t have to give a tenant unfettered remedies if that scenario a...