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When leasing retail space, tenants generally negotiate key specific business terms, such as rent, term, termination rights and the scope of construction. However, there are often lesser known or “hidden” risks that may not be addressed by tenants in their lease negotiations. These types of risks include availability of utilities, ceiling heights, differing floor elevations within the space, unusable space within the premises, and zoning and parking restrictions, as well as access limitations. This article addresses certain of these concerns and discusses how a savvy tenant may choose to address these items within its lease document.
Availability of Utilities
Generally, tenants believe that any and all amounts of utilities that they require will be available to their premises. However, a tenant must be careful to confirm that there is sufficient capacity within the main utility closet at the building to supply the required service. If there is not, a tenant will often have to pay the cost of bringing such utility service that it requires to the premises. This may require the tenant to add new electrical transformers or other utility components to the building, or to import service from a much further distance than the tenant had expected in order to be able to connect.
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