Landlords: Be Flexible in Lease Terms, or Pay Up
Attention landlords: it may pay to study the case of the White Flint Mall and its redevelopment plan.
September 01, 2015 at 10:22 AM
2 minute read
Attention landlords: it may pay to study the case of the White Flint Mall and its redevelopment plan. According to Meghan Hottel-Cox and Timothy Watkins of Goulston & Storrs, the retail landlord was sued by its anchor tenant, Lord & Taylor, and lost—by a lot.
Back in 1975, the mall and the store entered into a long lease, lasting until 2042. The contract's terms prohibited the mall from making any major changes without Lord & Taylor's consent, explain the authors. But post-2008 recession, White Flint Mall said it was struggling and started redevelopment. Lord & Taylor requested $100 million in compensation for losses it claimed it would suffer during the renovations, but the landlord refused to pay. The store sued and won, with the jury awarding it $31 million in damages.
“This case provides a caution to landlords in the changing retail scene across the country and a relief to tenants who see landlords not keeping their best interests in mind during redevelopment,” explain Hottel-Cox and Watkins. They say the key takeaway for landlords is to maintain flexibility in long-term leases, since market forces are hard to predict. As for tenants, they say it's important “to know what areas of the property are most important for you to protect and negotiate, as Lord & Taylor did here, for certain consent rights in those areas.”
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