Large Storage Area Didn't Violate Retail Use Requirement

A lease required the space to be used for retail purposes only, but permitted the storage of goods “as an incident” to conducting the retail business. A subtenant used 17,302 square feet of 60,000 square feet of the space for “extra storage.” The owner sued the tenant, claiming that it had violated the lease because the subtenant's storage area was so large that it wasn't incident to the retail business. The owner also claimed that the subtenant's use of so much space for storage deprived it of percentage rent.

A Connecticut court ruled that tenant hadn't violated the lease. The court said that the lease recognized that storage of goods is incident to a retail operation's business. (The court noted that incident meant something dependent on or subordinate—that is, lower in priority—to something else of principal or greater importance.) Here, the use of part of the space for storage of goods was dependent on or subordinate to the business of selling those goods, said the court. Also, the nature of the subtenant's business (a seller of outdoor lawn and patio furniture) required a large storage area, the court added. The court also pointed out that the parties could have, but didn't, specify either the minimum square footage to be used for retail space or the maximum permitted for storage space. And the court refused to rewrite the lease to set those amounts. Also, the court rejected the owner's percentage rent argument because the owner didn't prove that the subtenant intentionally expanded the storage area to reduce percentage rent [The Stop & Shop Supermarket Co., LLC v. Granite National Realty, LLC].