Don't Let Tenant Use Space for Non-Sales Purposes
So much retail business is done online that it’s common for tenants that are pulling in profits that way to use their brick-and-mortar spaces for purposes related to the business, but not to actually sell products. For example, a tenant with a successful website might turn its store into a service center, a display room, or merely a counter where customers can return or exchange online purchases. But if there isn’t merchandise for sale, it’s bad for your business; the service center won’t generate any percentage rent if the tenant doesn’t make any sales there. And a space used only as a service center will probably draw fewer people to your center than a store that’s fully stocked with merchandise for sale, decreasing foot traffic that typically would benefit other tenants.
To avoid that situation, add language to the lease’s use clause that requires the tenant to: (1) conduct its business in a way that will generate the most gross sales; (2) keep its entire premises fully stocked with merchandise that’s available for immediate sale; and (3) be fully staffed at all times, which will allow customers to make purchases as easily and smoothly as possible.