Common Area Maintenance (CAM) Charges
It’s important to understand the tenant’s risks associated with CAM charges before signing a lease. CAM charges trip up more tenants than almost anything else in a commercial lease. They look straightforward — you’re sharing the cost of maintaining common spaces like lobbies, hallways, and parking lots. Fair enough. The problem is that some landlords treat CAM as a blank check. For example, a new roof goes in or the parking lot gets repaved. Suddenly, you’re footing part of that bill even though those are capital improvements that benefit the landlord’s asset, not your day-to-day operations. Moreover, management fees get padded in. Costs that really only apply to another tenant somehow get spread across everyone. Before you sign, ask for a full itemized breakdown of what’s included. Also, push to carve out capital improvements and unrelated expenses. Make sure the lease gives you the right to audit the numbers. When negotiating CAM, carefully consider your own tenant’s risks—these charges can escalate unexpectedly.
Operating Expenses and Pass-Through Costs
Base rent is rarely the whole story. Most commercial leases also make tenants responsible for a share of the landlord’s operating expenses. This sounds reasonable until you start reading what actually qualifies. Expenses tied to other properties the landlord owns can sneak in. Annual increases can keep climbing with nothing to stop them. Importantly, these aren’t edge cases — they come up all the time. Cap the annual increases, get the lease to spell out exactly what counts as an operating expense, and hold onto your right to audit so you’re not just taking the landlord’s word for it. To avoid unnecessary tenant’s risks, clarify which costs are legitimate and which are not.
Relocation Clauses
Most tenants skim right past relocation clauses without realizing what they’ve agreed to. These provisions let the landlord move you to a different space in the building — sometimes with very little notice. Even if the new space is technically similar, the move itself disrupts operations and costs money to reconfigure. It can seriously hurt you if you lose a storefront location customers know how to find. Try to get the clause out entirely. If that’s not happening, at least lock in considerable advance notice. In addition, seek full reimbursement of your moving costs and language that requires the replacement space to be genuinely equivalent — not just comparable on paper. It’s crucial to understand the tenant’s risks posed by unfavorable relocation clauses.
Build-Out and Improvement Obligations
Build-outs rarely go as smoothly as planned, and vague lease language makes them worse. If the lease puts you on the hook for permits without laying out the requirements clearly, you’re looking at likely delays and fines before you’ve even opened your doors. The restoration obligation is the other big one — it requires you to return the space to its original condition when you leave. This can mean ripping out improvements you paid good money to put in. It’s easy to not think about that when you’re just trying to get open. Work out who’s responsible for what before construction starts. Also, negotiate the restoration terms down to something reasonable. Push for the landlord to contribute to improvements that actually add value to the property. With build-out agreements, be aware of additional tenant’s risks you may face regarding restoration requirements.
Quiet Enjoyment Clauses
The name makes it sound like solid protection — the landlord stays out of your way and you run your business. In reality, quiet enjoyment clauses tend to be full of exceptions that swallow the rule. Landlords routinely carve out broad rights to enter for inspections and repairs. If a building-wide maintenance issue knocks your utilities out for a day, good luck arguing that’s a violation. When you’re negotiating this provision, get specific about when the landlord can come in, under what circumstances, and how much notice they have to give you — except in a real emergency. Vague language here will not work in your favor, so identify any tenant’s risks that arise from unclear definitions.
We have handled retail chains that have multiple locations in shopping centers. Please get in touch with us (212) 619-1500 before signing your first mall lease.