Retail Store Leases

Retail Store Leases: The Risk Profile

Retail leases expose tenants to a uniquely complex set of costs beyond base rent. The typical exposure ratio is 8–14x monthly rent. Common lease length: 5–10 years. Personal guaranty required: 85% of leases. CAM charges frequently add 20–40% to the advertised rent.

Unique Risks in This Industry

• CAM charges — covering parking lot maintenance, landscaping, common area cleaning, and property taxes — are frequently uncapped and reconciled annually, almost always upward
• Percentage rent clauses take a share of gross revenue above a natural breakpoint, penalizing successful retailers
• Co-tenancy clauses protect against anchor tenant departure, but only if they're negotiated into the lease at signing
• Exclusivity clauses prevent the landlord from leasing nearby space to a direct competitor — but only if they're specific and well-drafted

The Biggest Mistake in This Industry

Signing a 10-year retail lease in a mall or shopping center without a co-tenancy clause — then watching the anchor tenant leave, foot traffic drop 60%, and the lease obligation continue at full rent for 7 more years.

Negotiation Priorities

1. Co-tenancy clause tied to anchor tenant occupancy with rent reduction or early exit trigger
2. CAM cap limiting annual increases to 3–5% with full audit rights and exclusions for capital expenditures
3. Exclusivity clause specifically defining your product category and prohibiting landlord from leasing to direct competitors within the center

Retail Store Lease Risk by State

Retail lease enforcement, CAM structures, and co-tenancy remedies vary significantly by state. Select your state for a detailed analysis.