During a lease negotiation, the retail tenant likely will spend the majority of its energy focusing on the business terms in the lease – such as rent, term, TI allowance, security deposit.
The tenant also should spend some time thinking about its operation in the premises during the term.
Three problems that likely will arise during the lease term are (a) landlord’s use of the space right in front of the store, (b) interference with the visibility of and/or access to the store, and (c) disturbances by landlord from construction, including repairs and renovations.
The “No Build Zone”
The retail tenant should have the right to dictate the aesthetic conditions of the exterior store front, as well as the interior of the store.
This is important because the appearance of the store will help maximize customer traffic and will tie into the tenant’s marketing and branding efforts.
In addition to control the aesthetics of the exterior storefront, a retail tenant should be concerned with the common area of the center adjacent to its store and with the visibility and access of the store to the main streets adjoining the center.
The tenant should insist upon a provision in the lease prohibiting landlord from making any changes in the common areas immediately in front of the store.
This would include restricting installation of structures or other improvements like kiosks, signs or automated teller machines.
A retail tenant does not want to have its store blocked in any way by these types of items and does not want to have interference with potential customer traffic.
Visibility and Access
The landlord should covenant that it will not make any changes that would reduce the visibility of the leased premises from any adjacent street or reduce access to and from the leased premises.
The goal for the tenant is to prohibit any landlord activity that might interfere with customer car or foot traffic to its store.
The parking in the center should be in compliance with applicable law during the term. This is an often overlooked item, but it is important for the smooth operation of the center.
Non-Disturbance and Construction Activities
The tenant can negotiate a remedy in the event landlord unreasonably interferes with tenant’s store operation.
One possible remedy is to have a rent abatement in the event any construction work by landlord, or authorized by landlord, unreasonably interferes with the tenant’s business operations or use of the leased premises.
This type of remedy affords the tenant an immediate fix for the interference and interruption in store operations. It also provides a strong incentive for landlord to resolve the interference and interruption, which further benefits the tenant.