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In the past, utility costs have been the impetus for owners to encourage their tenants to conserve energy while operating their businesses. But in recent years, environmental concerns have compounded many owners’ concerns about tenants using excessive amounts of energy once they move into the space they’ve leased—especially if the owner will be paying for a significant amount (or all) of the cost.

Traditionally, common area maintenance (CAM) costs are calculated based on an estimate of what a shopping center’s CAM costs will be for the year, and the tenant pays a proportionate share of those costs. At the end of the year, the tenant’s payments are reconciled with the center’s actual CAM costs.

When you need to find a contractor for a major project at your center, such as an ongoing job like landscaping, or a one-time job like replacing roofs, don’t simply hire the first available contractor you can find. Instead, prepare a request-for-proposal (RFP) to solicit bids from multiple contractors. But be specific when drafting your RFP.

When the terms of a lease are negotiated carefully—and complied with—leasing can be the most profitable and efficient use of your commercial space. And you might think that a traditional commercial lease is the only option available to you. But a lease isn’t as appropriate for certain types of tenants as a “license agreement” is. Some tenants—such as “on-demand” temporary office space providers, certain types of storage space, and mall kiosks or carts—present a unique challenge to owners.

What exactly are license agreements and how can they be beneficial to owners? When you sign a lease with a tenant it creates a landlord-tenant relationship that can work in your favor, but also comes with some potential problems. For example, when a tenant defaults on its lease owners usually don’t have the option of terminating the lease immediately. The owner might have to wait a certain period of time for the tenant to “cure”—that is, fix—a violation.

When a prospective tenant isn’t as financially strong or experienced as you’d like, your choices aren’t limited to either taking a substantial risk or passing on an otherwise valuable leasing opportunity. You can secure the tenant’s lease obligations by getting a guaranty for additional financial security. If the tenant is willing to provide a third-party guarantor, you’ll need to negotiate the scope of the guaranty.

If you’re like many commercial real estate owners, you’ve considered using “alternative dispute resolution” (ADR) methods, including arbitration, to resolve your differences with tenants out of court. For example, when you and a tenant are certain you disagree on a single, clear-cut issue, arbitration may be the best place to start.

By David S. Houston, Esq.

In this economy, it’s tough enough to fill your center with tenants, without inadvertently letting existing ones sublet space to businesses and restaurants that compete with your leasing efforts. For example, if you’re searching for a tenant to fill vacant restaurant space at your center, but another restaurant tenant decides to sublet its space, you’ll both be, in essence, competing for the same tenant—a restaurant that wants to lease space in your desirable location but wants to get a competitive price.

Generally, commercial leases require tenants to return space in the same condition as it was rented to them. There’s some leeway for “ordinary wear and tear” to the space. But there are several ways that a tenant can negatively affect you when it moves out, or “surrenders” the space, not just by damaging physical items there.