Retail Tenants Are Asking for New Lease Provisions

New retail leases are looking different than they did prior to the pandemic. Retail tenants are asking for new lease provisions and protections in a number of areas. According to Gary Glick, a partner at Cox, Castle & Nicholson LLP, these new provisions include new construction provisions, dedicated short-term parking spaces, opening requirements, operating requirements and termination rights.

For newer leases, construction provisions are central to these changes because new retail leases also come with a tenant build-out. “Once the landlord has delivered the premises to the tenant, the tenant does not want to be obligated to build out its space until it knows that certain governmental restrictions that affect its operations have been lifted,” Glick tells GlobeSt.com. “For example, a gym or restaurant may not want to start construction of its tenant improvements until it knows that it can operate without significant capacity restrictions. In this situation, the landlord may want a “put right” that would compel the tenant to commence construction within a defined period of time, six months for example, or give the landlord the right to terminate the lease.”