A retail lease lives or dies on traffic, and traffic is governed by clauses most tenants never read: who else can open next door, what happens when the anchor goes dark, and how much of your sales the landlord shares in. A storefront in a thriving center and the same storefront in a failing one carry identical base rent but wildly different value, and the difference is written into the co-tenancy, exclusivity, and percentage-rent terms. This checklist walks them group by group. For the dollar math, see the retail store exposure breakdown; for general terms, the commercial lease checklist.
This is an observational checklist. Each item names what to find in your lease and why it matters — it does not tell you what to decide. Confirm what your document actually says for each point, and treat any protection that is simply absent as information about where your exposure sits. The legal judgment about what to do with what you find is yours.
1. The Location and Traffic Terms
These shopping-center clauses determine whether your neighbors help or hurt you, and they rarely appear outside retail.
- Co-tenancy. Confirm whether a co-tenancy clause lets you reduce rent or terminate if the anchor tenant closes or center occupancy drops below a threshold. Many landlord drafts omit it, leaving you at full rent in a half-empty center.
- Exclusivity. Find whether you have exclusive use protection against a direct competitor leasing space in the same center. Without it, the landlord can place a rival next door.
- Relocation and recapture rights. Confirm whether the landlord can relocate your store within the center or recapture the space. A relocation clause can move you to inferior frontage mid-term.
- Kick-out clause. Find whether a sales-threshold kick-out exists and whether it runs to the landlord only or is mutual, since a mutual kick-out can give you an exit if sales never materialize.
2. The Money Terms
Retail rent is frequently more than base rent, and the extras are where margin disappears.
- Percentage rent and breakpoint. If present, confirm the percentage, the breakpoint above which it applies, how gross sales are defined (and what is excluded), and the landlord's audit rights over your books.
- CAM, marketing fund, and merchant dues. Confirm your pro-rata CAM share and whether increases are capped, plus any promotional or marketing fund contribution and merchant-association dues common in malls. The CAM charges calculator estimates the range.
- Base rent and lease structure. Confirm whether the lease is gross or triple-net (NNN), since NNN adds taxes, insurance, and maintenance on top of base rent.
- Rent escalation and free rent. Find the annual increase and confirm any build-out free-rent period covers your fit-out before rent begins.
3. The Build-Out and Signage Terms
A storefront's appearance is regulated by the lease, and restoring it at the end is a cost most tenants overlook.
- Signage criteria. Confirm what signage you are permitted, where, and whether the center's sign criteria limit visibility. Storefront visibility drives retail sales.
- Tenant improvement allowance. Find the landlord's build-out contribution, how it is paid, and what happens to any unused allowance.
- Restoration and surrender condition. Find the condition the lease requires the space to be returned in. A strip-back to vanilla shell is a common, underpriced cost. The restoration cost estimator gives a range.
4. The Operating Terms
These clauses control how you run the store day to day.
- Permitted use. Confirm the use clause covers your merchandise mix and leaves room to adjust it, since a narrow use clause can block a pivot or a sale to a different operator.
- Continuous operation and hours. Find whether the lease requires set hours or continuous operation (a "go dark" restriction), which removes your flexibility to cut hours in a downturn.
- Radius restriction. Confirm whether a radius restriction limits where else you can open, and over what distance and term, since an overly broad radius can block your own growth.
5. The Liability and Exit Terms
- Personal guaranty. Confirm whether you are personally guaranteeing the lease and whether it is unlimited or capped. An unlimited personal guaranty puts your own assets behind the full remaining lease value; negotiated leases commonly include a cap, time limit, or burn-off. The personal guaranty calculator sizes the exposure.
- Assignment and subletting. Find whether you can assign the lease when you sell the business, and on what conditions.
- Early termination and holdover. Confirm any early-termination right and the holdover rent if you stay past the end date. The early termination calculator estimates the exposure.
- Default, cure, and landlord mitigation. Confirm how default is defined, the cure period, and whether the landlord must make reasonable efforts to re-let after a default.
How to use the result: Mark every item you cannot answer from the lease text. The unanswered items are your shortlist for questions, negotiation, or counsel review — and a missing protection (no co-tenancy, no exclusivity, an uncapped CAM) is itself a finding, not a blank to ignore. Related reading: boutique retail exposure, salon and spa exposure, and retail lease risk by state.
Frequently Asked Questions
What should I check in a retail lease before signing?
Beyond standard commercial terms, a retail lease turns on location and traffic clauses: co-tenancy (what happens if the anchor or a share of the center goes dark), exclusivity (whether the landlord can lease to a direct competitor next door), percentage rent and its breakpoint, continuous-operation and permitted-use clauses, signage criteria, any radius restriction limiting where else you can open, and the landlord's relocation or recapture rights. Confirm each against the lease text before signing.
What is a co-tenancy clause and why does it matter?
A co-tenancy clause ties your obligations to the occupancy of the center. A strong one lets you reduce rent or terminate if the anchor tenant closes or occupancy falls below a set threshold, because your foot traffic depends on those neighbors. Many landlord-drafted leases omit co-tenancy entirely, which leaves you paying full rent in a half-empty center.
What is a radius restriction in a retail lease?
A radius restriction prevents you from opening another location within a defined distance of the leased store, on the theory that a nearby second location would split sales the landlord counts on for percentage rent. Confirm the radius distance and the term, because an overly broad radius can block your own expansion for years.
What is a kick-out clause?
A kick-out (or recapture) clause lets one party end the lease if the store fails to reach a sales threshold by a certain date. Landlords use it to recapture underperforming space; a mutual kick-out can also give the tenant an exit if sales never materialize. Confirm whether the right runs to the landlord only or both parties, and what the sales threshold and notice window are.
Should a retail lease be reviewed by an attorney?
Retail leases combine a personal guaranty, percentage rent, co-tenancy and exclusivity provisions, and shopping-center rules that materially affect sales, so they are commonly reviewed by counsel before signing. A checklist and an automated scan can tell you where the exposure sits; the legal judgment about what to do with that information is yours.