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When you think about settling a dispute with a tenant without going to court, arbitration as an alternate dispute resolution method might immediately come to mind. That’s because arbitration is widely known and talked about in commercial real estate. But before you pursue arbitration, consider resolving a dispute by submitting the dispute to mediation. Mediation is typically faster and more economical and efficient than either fighting in court or using the more traditional out-of-court strategy of arbitration.
Although the model of the traditional shopping mall—one or more big box or anchor stores as a destination and smaller in-line tenants that benefit from the foot traffic—has changed over the years, the concept of a synergistic relationship among tenants continues. Convenience is key and if you don’t realize the benefit of synergy, which can create loyalty from shoppers who know they can get everything they need with one trip to your center, you’ll lose out and so will your tenants.
Signage rights are hotly contested for some leases, and particularly those with retail tenants. After all, prominent signs can draw foot traffic to a store. Ambiguous signage provisions can create a dispute that could’ve been avoided if signage had been addressed in negotiations and drafted in the lease. A Massachusetts landlord found out the hard way that its ownership interest in a pylon at its center wasn’t protected by the tenant’s lease.
Owning a large retail or office building property can be lucrative. After all, if the rent rate is based on the square footage that a tenant rents, a vast space has the potential to pull in more money than a small one. But profiting from the sheer size of your property isn’t a given. To collect rent, you need a tenant, and if you can’t find one, you’ll have vacant space on your hands. If you’ve thought about what you can do with that space, consider renting to a smaller tenant—without giving up the search for a bigger tenant.
Sometimes, no matter how well-negotiated your lease is, you could still be subject to a tenant’s whim regarding certain issues, like the tenant giving its consent to changes at your shopping center or office building. And you might think that because you and the tenant are sophisticated parties, it’ll be reasonable about consent. You might even think that the covenant of “good faith and fair dealing” applies in such a scenario—which would require the tenant to not withhold consent as leverage to get other advantages.
With the start of the holiday season coming up, kicked off by Halloween and ending after Christmas, it's wise for you to design a crowd control strategy for the holiday season at your shopping center. Here’s a plan that you can implement:
Mixed-use properties have become ubiquitous in most areas of the country. Often, they make the most of a property’s layout, especially in tight urban neighborhoods—providing easy-to-access commercial space on a first floor and residential units on the floors above so no space is wasted. And if leases are drafted that protect landlords from both typical lease issues as well as some limited mixed-use-specific angles, they can be financially advantageous. But there are special issues to consider, such as warranty of habitability.
Q: I’ve negotiated percentage rent provisions in my leases with several of my retail tenants at the shopping center I own. I’m relying on these tenants to give me correct gross sales figures so that I can get the percentage rent that I’m owed, and can gauge how well the tenants’ businesses are doing. I’ve heard of scenarios where a dishonest tenant may try to undercut the owner’s percentage rent by lowering its gross sales figures.
With the failure rate of new restaurants hovering around 59 percent in the first three years of opening, it’s not surprising that restaurant owners are trying to come up with a hook—a theme, a specific type of ambiance, or discounts for certain groups or time periods in the day or evening. A trend that has gained so much momentum that it’s no longer a novel concept—and is somewhat expected in “cute” or bustling neighborhoods—is dining “al fresco,” that is, on a patio or outdoor common area next to the restaurant.
Sometimes a lawsuit stems from someone being injured in your tenant’s space. Savvy shopping center and office building owners know that they can protect themselves by requiring the tenant to name them as an “additional insured” on their liability insurance policies. But if your lease requires only that the party identified in the lease as the “Landlord” be named in the tenant’s policy as an additional insured it won’t give insurance coverage to everyone needing protection.