Understanding the Basics of Shopping Center Leases

The shopping center lease is a private contract between the individual renter leasing the space and the landlord owner who rents out the space in the shopping center. Although the parties negotiate the contract terms in ways they best see fit, every shopping center lease does have typical lease provisions. 

Understanding Shopping Center Leases

The shopping center lease generally specifies both the rent and the length of time the tenant will occupy the space. Often, the tenant pays a base rent that is tied to the square footage of the store. In addition, the tenant may be required to pay a certain percentage of gross sales. It is also common that the tenant contributes a portion of the expenses to maintain the common areas of the shopping center, as well as pays part of the property taxes.

In addition to clauses regarding the length of the lease and the amount of rent due, there are other provisions necessary for the protection of the landlord and tenant. A tenant may want an “option to renew” to let him keep the space, if s/he chooses, at the termination of the lease. The lease agreement will probably specify what changes the tenant may make to the space, such as reorganizing, redecorating, and repainting. There may be limitations on the type of business the tenant can run and there may be requirements that the landlord not rent space in the same location to a direct competitor.

Case Studies: Understanding Shopping Center Leases

Case Study 1: Renovation Restrictions

Sarah’s Boutique leased a space in the Sunshine Mall. The shopping center lease agreement included strict provisions regarding renovations. Sarah, the tenant, wanted to reorganize the layout of her store, repaint the walls, and redecorate to enhance the shopping experience for her customers.

However, the lease agreement stated that any alterations to the leased space required prior written approval from the landlord. Sarah had to work within the restrictions set forth in the lease and seek the landlord’s consent before making any changes to her store.

Case Study 2: Non-Compete Clause

Mike’s Electronics signed a lease agreement with the Southside Plaza. The shopping center lease contained a non-compete clause to protect Mike’s business interests. According to the clause, the landlord agreed not to lease space in the same location within the plaza to any direct competitor of Mike’s Electronics. This ensured that Mike’s business had exclusive access to customers seeking electronics in the shopping center, giving him a competitive advantage.

Case Study 3: Option to Renew

Jane’s Bookstore leased a space in the Riverfront Mall. The shopping center lease agreement included an “option to renew” clause. As the initial lease term approached its end, Jane had the right to exercise the option and request an extension of the lease for an additional period. This clause allowed Jane to secure her bookstore’s presence in the mall, providing stability and continuity for her business.

Getting Help

These are just a few examples of possible clauses that could be found in a shopping center lease agreement. If you are considering renting space in a shopping center, you may want legal assistance to make sure your rights are protected and the lease agreement is fair.