Q My lease with a tenant in my shopping center gives it an option to renew for an additional 10-year term. Under the lease, the tenant must exercise its option by sending a letter by certified mail to me by a certain date. When I hadn't heard from the tenant by that date, I assumed that it wanted to move out of the space at the end of the lease term, and I made efforts to find a replacement tenant.
Q I'm thinking of renting space in the first floor of the mixed-use building I own to a successful retailer. I'd like to offer the tenant a long-term lease because I think it will bring substantial foot traffic to the other stores in the building. I'm planning on offering the tenant a 15-year lease with 10 options to renew for consecutive 10-year periods. However, I'm concerned that if the tenant wants to get out of the lease later, it will claim that such a large number of options invalidates the lease.
Your lease with a retail tenant probably gives it certain special rights and remedies. For instance, the lease may include a cotenancy clause that lets the tenant abate its rent if you don't replace another tenant—typically, an anchor—when it goes dark. Or it may include an exclusive that lets the tenant sue you for damages or terminate its lease if the exclusive is violated. And it might have a performance kickout right that lets the tenant terminate its lease if its gross sales don't meet a minimum sales threshold during a set time period.
