Shopping Center Remodeling and Expansion: Considerations and Drafting Points

This two-part article explores some of the issues that arise in negotiating a lease form that contains clauses defining the rights of the landlord and obligations of the tenant with regard to remodeling or expanding a shopping center. The first part of the article discusses negotiating points that could benefit, rather than burden, a landlord and tenant, during the administration of the lease. Part two will provide some suggested model language to consider when drafting a lease.

The need for both the landlord and the tenant to maintain a competitive shopping center (and competitive retail base) will arise in those instances in which the surrounding retail base has had a new increase in new shopping center development. A familiar scenario for remodeling may occur when a landlord owns a community shopping center anchored by a grocery store and drug store. At the time it was constructed, the center was considered on the outer edge of the population trade area. The population trade area increased year after year, and new shopping centers were developed in the same trade area to absorb the increased demand for retail goods and services. These new shopping centers incorporate and reflect current shopping center design standards relative to facility upgrades, layouts of inline buildings and outlot parcels, parking lots and access, landscaping, and trade name signs. The newer shopping centers are, therefore, more attractive and desirable to retail tenants and their customers.