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Storage Space in a Retail Facility

BY Glenn A. Browne
May 14, 2011

With the high cost of rentable area within a retail facility, tenants increasingly are searching for ways to reduce their rental costs, while at the same time creating enough space to house their necessary equipment, storage and inventory. One method that tenants may use to reduce their rental cost is to lease storage space in addition to the retail floor area that the tenant will need to display and sell its goods. However, when leasing storage space within a retail facility, tenants should be certain to address certain terms concerning the storage space, which may include coordinating the expiration date of the storage space agreement (the “Term”) to coincide with the Term of the retail lease, rent issues, relocation issues and construction and utility issues. This article addresses those concerns, and suggests some ways in which a tenant can be certain that its storage space agreement works in concert with its retail lease.

Term

Quite often, landlords will seek to utilize a license agreement or other ancillary document for establishing a tenant's occupancy of storage space. This method of documentation creates several problems for the tenant. First, quite often, the Term of the storage space agreement will not be drafted in a manner that coincides with the Term of the tenant's retail lease. As a result, a tenant could be in an unenviable position of having its retail lease expire, while at the same time having to pay for the lease of storage space, even though the tenant is no longer an occupant at the retail facility. Further, when retail leases are modified, amended or extended, the tenant does not always remember to modify the storage space agreement at the same time. As a result, the fact that the terms for the retail lease and the storage space agreement do not coincide leads to unfortunate results.

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