Reviewing Shopping Center Leases for Prospective Tenants

by | Business Law, Private Client Services

For over 40 years, the attorneys at Pohlman Law Group PLC have been involved in the drafting, review, enforcement and defense of shopping center leases for both Landlords and Tenants. During that time, the lawyers at PLG have learned the importance of addressing the critical issues during the negotiation stage of a shopping center lease.

Most shopping center leases are fundamentally the same. They all address the same basic issues. And, for the most part, they all start out very landlord friendly. PLG’s goal in review the leases is to assure that: (i) the shopping center lease adequately addresses the initial development requirements for the premises; and (ii) the shopping center lease provides you a reasonable means for operating in the premises including periodic improvements; and (iii) the default provisions are reasonable.

The first issue, making sure a lease adequately addresses the initial development requirements for the premises requires coordination between you, PLG, the architect and a contractor. You want to make sure you have the professionals (the architects and contractors) fully inspect the premises to assure that you and they understand the steps necessary to develop the premises. For example, it is not unusual for the unprepared tenant to find out after the shopping center lease is signed that the cost to develop the premises is double the expected cost. Or, there may be unexpected permitting issues that require unexpended repairs. Such developments result in a severe drain on the cash flow of a new business, which may be fatal to its success.

The second issue, making sure the lease provides you a means to operate in the premises during the life of the lease, again protects the economics of your business. Some leases require costly upgrades at the sole discretion of the landlord, while others require landlord consent (including architectural plans) for simple cosmetic upgrades. These types of issues are unlimited. PLG attempts to cut through the problem areas to try to protect you from unexpected cash outlays during the life of the lease.

The final major issue is critical to protect you against a “technical default” that opens the door for the landlord to try to kick you out or, worse, have a basis for raising your rent.

In reviewing leases, PLG also addresses issues relating to the definition of a permitted use, limitations on common area rent charges, assignment issues, destruction of property/casualty issues, building permit and occupancy permit issues, audit rights, financing contingencies, relocation and expansion issues, HVAC and other maintenance issues, landlord default provisions, parking and visibility issues, lease guaranty issues, and many other issues.

PLG will also assure that the shopping center lease comports with franchisor requirements.

PLG is ready to work with you to review your shopping center leases. PLG has a proven system that results in changes that are generally deemed reasonable by the landlords and provide greater protection to you. Please feel free to call Scott Pohlman or Robert Baumgartner, 703-495-2224 to discuss this further.