Construction Interfering with Tenant’s Business

Q: What is the best response if a tenant requires me to promise that the construction of future phases of my shopping center won’t interfere with its ability to run its business, or that all access spaces around its space are kept clear, including the center’s main entrance?

A: If you have to make this agreement, you should promise only that the construction work won’t materially (or unreasonably) interfere with the tenant’s business operation. That allows the construction work to cause some interference, but notmajor interference. You should also promise to only make reasonable efforts to prevent the construction work from interfering with all access points around the tenant’s space, including the main entrance. That way, it won’t be necessary to do anything extraordinary or costly to keep those access points clear. In addition, you should add the following Model Language to your lease after checking with your attorney:

Model Lease Language

Tenant acknowledges that construction will inevitably create more interference (including, without limitation, noise) with Tenant’s business operations than would arise in the absence thereof. Landlord covenants that the construction work will not materially interfere with the operation of Tenant’s business at the Premises, and Landlord shall use commercially reasonable efforts to minimize such interference and keep all access points around the Premises and the main entrance of the Shopping Center free from obstructions.

Don’t be surprised if a tenant in this situation demands additional signage indicating the name of the business and that the business is open during construction. The tenant will argue that the signage is necessary because the construction work may block its store’s visibility. You should agree to provide signage if, and to the extent that, signage is provided for other equal-sized tenants. But make sure to retain the sole power to decide the size of the signage and where it will be located.

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