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The Effect of On-line Shopping on Retail Leases and Percentage Rent

Percentage Rent and Retail Leases

Written by: Geoffrey H. Smith

“Percentage Rent” is a familiar concept to retailers and landlords and has long formed a significant aspect of the business arrangement between commercial landlords and their retail tenants.  In a lease arrangement that includes percentage rent, a landlord may negotiate a relatively reduced base rent for the chance to have some “skin in the game” by agreeing to participate in a percentage of tenant’s revenue, through gross sales, when that revenue exceeds a certain threshold amount.  Tenants appreciate this arrangement because they pay percentage rent if they are doing well and their sales exceed that negotiated threshold level. Landlords appreciate this model because it compensates them for the costs they incur in creating and maintaining successful shopping centers with amenities, such as food courts and open spaces.  If a successful shopping center drives foot traffic to individual tenants that increases their sales, tenants are often willing to compensate landlords for their part in driving that foot traffic.  The concept really is a “rising tide lifts all boats” model, in which landlords and tenants work as partners. 

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Heating, Ventilation and Air Conditioning (“HVAC”), Solar and Other “Green” Heating Alternatives in Retail Leasing

HVAC for Retail Leases

Written by: Gary D. Buchman

A topic that arises in virtually every retail lease, and yet is barely addressed in the letter of intent (LOI), is the heating and cooling of the demised premises.  The LOI is typically cursory:  “Landlord shall deliver the demised premises to tenant with a 15 TON HVAC system in good working order.”  Who is responsible to maintain and repair the system?  Whose obligation is it to replace the system if it can no longer be repaired?  While these are all business issues, they are most often left for the lawyers to determine during the lease negotiation.  A standard landlord clause would provide:

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Retail Shopping: Virtual or Reality?

Written by: Jane Errico

In the 1998 movie, “You’ve Got Mail,” the charming children’s bookshop owned by Meg Ryan’s character is threatened by the mega-box book store owned by Tom Hank’s character. Despite the small shop’s long history as a part of the Main Street USA-style neighborhood, the store eventually folds underneath the pressure exerted by the discount powerhouse next door. Flash forward to 2014, and Borders book stores have closed their doors due in large part to’s supremacy in the sale of on-line books. According to Bloomberg News, in December 2013, “Cyber Monday web sales surged, sending online shoppers to a single-day record as and EBay, Inc. siphoned customers from brick and mortar stores.” At first glance, it seems like there’s only bad news for traditional retail shops.


Must a Retail Business Allow an Individual to use its Property to Solicit Signatures for Elective Office?

Soliciting Signatures at Retail Stores

Written by: Edward M. Bloom

In 2012, Steven Glovsky needed 1,000 signatures in order to be placed on the ballot for a seat on the Governor’s Council.  He went to the Roche Brothers supermarket in Westwood and asked permission to stand outside the door to collect signatures.  The supermarket is a free-standing building on a 5 acre site and the store manager informed Glovsky that the store had a non-solicitation policy.  Glovsky brought suit against the store under the Massachusetts Civil Rights Act and when the trial court dismissed his action, he appealed and the SJC agreed to hear the case on direct appellate review.

Amazon being pressed to collect sales tax in Massachusetts

Amazon sales tax Massachusetts

The Boston Globe reported on November 21, 2012 that the Patrick adminstration is pushing for to collect sales tax in light of their growing physical presence in Massachusetts. Currently, online retailers such as Amazon are exempt from collecting the 6.25% Massachusetts sales tax.


How Green is my Dollar Tree?


Maximizing Percentage Rent: Pointers for Landlords

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What is “Main Street Fairness” or “Marketplace Fairness”?


6 Tips for Retail Tenants: Traps Preventing Lease Transfers

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