Shift Off-Site Traffic Improvement Costs to Owner

December 7, 2016
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If the owner of the shopping center where you lease space provides off-site traffic improvements, you should try to avoid paying for that. After all, these improvements—for example, special signage and lighting in areas leading to the property or a way to control the flow of vehicles into and out of the center—benefit the owner by helping increase customer traffic and boost sales—which are especially important to owners collecting percentage rent—and reduce the risk of accidents—which keeps insurance premiums and repair costs down.

But an owner will probably try to charge you for off-site traffic improvements, by trying to pass through the cost of installing, maintaining, and repairing them to you and other tenants at the center. A typical lease might not allow the owner to do this, so be prepared that it will be a specific part of negotiations.

Instead of getting left with a potentially hefty bill, add language to the common area maintenance (CAM) cost clause to avoid a pass-through to you for these off-site traffic improvement costs by the owner. You can do this by making sure that all costs associated with off-site traffic improvements are specifically noted as being exempt. To do this, ask your attorney about using the following model language in your lease:

Model Lease Language

Landlord shall not pass through to Tenant costs associated with those improvements, systems, signage, equipment, and installations that are designated by Landlord to serve or benefit the Center by facilitating the flow of traffic into or out of the Center, whether or not located within, adjacent to, or near the Center.