CRE Owner Strategy: Is a License Right for You?

When the terms of a lease are negotiated carefully—and complied with—leasing can be the most profitable and efficient use of your commercial space. And you might think that a traditional commercial lease is the only option available to you. But a lease isn’t as appropriate for certain types of tenants as a “license agreement” is. Some tenants—such as “on-demand” temporary office space providers, certain types of storage space, and mall kiosks or carts—present a unique challenge to owners. If you want that type of tenant in your space, but you don’t want to tie yourself down to it with the liability and long-term relationship that a lease creates, you have to find some other way to attract the tenant but also protect yourself in the process.

That’s where a license agreement comes in. A license agreement can secure a tenant for you, but with less risk and more flexibility than a typical lease. So how exactly does a license work and under what circumstances does it typically work best? In this April 2013 Special Issue, we’ll discuss how to determine whether a license is right for your available space, what terms to include and avoid when drafting a license agreement, model language you can use when negotiating this unique type of arrangement with a prospective tenant, and tips on how your property manager can make sure that a licensee’s operations run smoothly.