We endeavor to inform our readers as to relevant news pertaining to our region. One of the Fairway grocery stores located in Rockland County closed yesterday. This store is part of a chain comprising approximately fifteen stores. As reported , the tenant was in year six of its commercial lease. Most commercial leases are likely to be for a term of at least ten years, with options to renew. As such, the tenant likely is vacating before the end of its lease term. Although this author has not personally reviewed the lease at issue, this post will discuss the provisions customarily contained in such commercial leases and the issues raised when the tenant leaves before the end of the lease.
Fairway represented that it decided to close this particular location not because of the overall financial health of its company. Other anchor tenants at the shopping center had already closed, which caused decreased customer volume for the grocery store that adversely affected its revenues.
Landlords typically negotiate the following provisions in leases. The rent due escalates through the end of the lease and the tenant forfeits its security deposit if the tenant vacates early. In order to avoid such costly penalties, the tenant may try to find a replacement tenant to whom the lease can be assigned. When the lease is originally negotiated, an experienced attorney will negotiate a liberal assignment clause so that the tenant can more readily exit the lease if the business is not successful at the location. That way, the landlord will be required to accept another tenant located by the tenant that is leaving the shopping center.