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A common request from tenants is a “performance kickout right”—that is, a right to terminate the lease if its gross sales during a certain period fall below or don’t reach a certain dollar amount. But that’s treacherous for owners. Giving a termination right to a tenant opens the door for numerous problems: no rental income, reduced value of the center to lenders, and dark space that might violate your cot...
Not all prospective tenants need architectural plans right away. But sometimes a prospective tenant needs to occupy new space so quickly that it wants you to start the buildout process before it signs your lease. You might agree to authorize your architects and engineers to prepare plans for the buildout to accommodate the tenant’s needs and severe time constraints. After all, you expect the prospective tenant to sign your lease.
While the holiday season can benefit your shopping center by bringing in more foot traffic and increasing sales, it can also create conflicts over festive signs and displays. You may encounter a tenant that puts up a large holiday display that isn’t in keeping with the appearance of your center’s aesthetic. But if its lease doesn’t prohibit it from setting up holiday displays or signs, you might not be able to prevent...
Commercial tenants typically want the right to “go dark”—that is, stop operating while continuing to pay rent—if their businesses aren’t generating enough revenue. “Going dark” can save tenants the cost of stocking and staffing the space they rent. But if you give a tenant the right to go dark, you may want to carve out a recapture right for yourself—allowing you to take back the space an...
To maximize your property’s value and profit, limiting premises liability should be a priority for you. Working with your property manager, who’s most likely to hear about and react to injuries before you do, can go a long way in avoiding personal injury litigation. To make sure your property manager understands the importance of preventing personal injuries and reacting to them appropriately when they do occur, make sure y...
When you lease space to a tenant, it’s impossible to predict whether you’ll experience the unpleasant repercussions of accidents, injuries, or criminal acts that can be attributed to the tenant. These events can be costly, but as with most other risks involved in leasing space, you can plan for the worst and hope for the best. An airtight indemnification clause can ensure that you won’t be left paying the price for th...
It seems like with each passing year, there has been an increase in national-brand “pop-up” shops appearing in shopping centers for the holiday season. Pop-up shops can be a great way to add pizzazz to your center, but they do pose some risks if you don’t understand the differences between these temporary tenants and long-term tenants, and prepare for them. Here are the top risks that you might run into—and how ...
If you’re like many shopping center owners, some of your tenants might have cotenancy rights. That is, you’re obligated to keep a certain space or spaces in the center leased to stores the tenant has specified in the lease. If you don’t, the tenant might have a right to pay lower rent, or even terminate its lease. But in some cases, owners have negotiated mutual termination rights if a cotenancy clause is triggered be...
If you’re working with a prospective lender, buyer, or investor for your office building or shopping center, the last thing you want is a surprise tenant issue that can hold up or even kill the deal. Any party preparing to spend money will want to know that it won’t be blindsided later with tenant claims that it’ll be responsible for resolving.
It seems unfair, but in some situations where a tenant has breached its lease and is no longer paying rent, the owner must try to mitigate its damages by finding another tenant who will pay rent. But if it’s not spelled out for you, how will you know if your efforts to find a new tenant are enough? A Connecticut case showed that an online ad placed by an owner for vacant space was insufficient to qualify as mitigating its damages...