Negotiate Common Tenant Parking Requests in Your Favor

Shopping centers often have one or more parking areas available for tenants’ customers and employees. Without adequate parking at the property where they rent space, stores and offices couldn’t survive—and owners would lose them quickly. Providing parking seems as though it should be easy—just designate an area where cars can be parked on the property you own. But there are several factors that you need to take into account in order to provide adequate—and legal—parking for your tenants. And savvy tenants know the ins and outs of negotiating parking area provisions in their leases to get the parking situation they need to operate successfully.

It’s fine for you to give a tenant parking rights that it asks for if you can accommodate the requests and it doesn’t harm you financially. But remember that a tenant could try to use the parking rights in its lease to block you from operating your lot the way you want to. That’s why it’s important to negotiate provisions in your lease with the tenant that will give you enough control over the parking lot to operate it the best way for your center and all of the other tenants.

Certain Number of Spots Must Be Available to Tenant

One of the most important things a tenant needs to know before signing a lease is whether there will be an appropriate number of parking spots for its business—legally and practically. This depends on two different things: the zoning code that applies to the premises, and whether the number of spaces that the tenant needs is actually available on a day-to-day basis for its customers and employees.

Zoning codes. Zoning codes require a minimum number of spaces to be available to commercial tenants. That number is determined by the type of property and the type of business, and is usually a ratio of parking spaces to leasable area in the premises. For example, a restaurant must have four spaces per thousand square feet in a certain shopping center. If the required number of spots isn’t available on the premises, a tenant won’t be able to legally operate its business. Be prepared for a tenant to ask you for proof that the number of parking spaces you’re prepared to give it meets the zoning code. Your site plan will show the number of parking spaces that have been approved by your town.

Daily parking. Even if there are enough spots according to the zoning code that applies to the tenant, you must be willing to allot in its lease a number of spaces that are adequate for its business—that is, enough spots for employees and customers to park every day. Most leases have a specific clause setting the number of parking spaces a tenant is allowed, like the one in our Model Lease Clause: Limit Tenant’s Right to Parking [Clause, par. 1].

The number of spots that a tenant is entitled to is key because a tenant wants to know that the parking lot has a maximum capacity that’s legal and that when it opens its store it’ll have enough parking spaces available to it. Even if there’s a legal number of parking spaces for a new tenant, if they’re taken up by existing tenants, there is no parking for its store. You must be willing to give a certain number of spots to the tenant in the lease that will be enough for it to run its business on a regular basis. Nothing puts a tenant out of business faster than making it a challenge for customers to shop there.

Reserved spots. Especially in a retail property, some tenants who are entitled under their leases to reserved parking spots want them directly in front of their stores. Often, tenants want the spots in front of their stores for the convenience factor—they believe that customers who park in those spots are more likely to go directly into their stores. However, some tenants, such as tenants that display merchandise in storefront windows, probably won’t want the display blocked by cars or trucks in nearby spots. These tenants would prefer reserved spots to be elsewhere in the parking area, like the middle of the lot. That way, merchandise displays are visible to passersby. If a contractor parks a large truck in front of a store, the tenant loses visibility for its signage. Most tenants ask where their reserved spots will be and want to have some say in the matter.

Employee parking. Whether employee parking will be mixed in with customer parking is another issue that tenants typically negotiate and one that’s important for owners to maintain control of. From the owner’s perspective, it doesn’t want the employees of each of the tenants to park in the primary spaces. You could have numerous employees in a shopping center, even hundreds if it’s a mall. If employees park in spots in front of the stores or in the main parking area, there might not be any spots for customers, who’ll leave rather than trying to find parking elsewhere.

Many leases say that parking for employees is reserved to a separate lot from the main lot or the rear part of a lot if there’s only one for the premises. Employees will be at a center all day long, so specify in your lease that the tenant’s employees are restricted to parking in “Lot B” or the “rear lot,” for example, so you have open spaces available where patrons can easily park. You should also prohibit employee parking outside of the designated area. Consider asking tenants for a list of the license plate numbers of their employees so you can enforce this [Clause, par. 1].

Prior Approval of Overnight Parking

Overnight parking in you parking area is bad because you don’t want someone to abandon a car or an employee to leave his car parked there for long periods of time, all of which can attract vandalism. And there’s always the concern that a definition of “permitted use” is too expansive and will allow a tenant to use the premises—including the parking lot—for activities that you neither contemplated nor approved.

While a tenant desires the flexibility to utilize the space that it leases, including parking spaces, for as many uses as possible, you need to make it clear in the lease that the spots are to be used for “the parking of motor vehicles only” [Clause, par. 2]. Forbid overnight parking without prior approval.

Who Pays for Security?

Securing the premises with cameras, a roving guard, an automatic gate, or some other surveillance system can be very expensive. A prospective tenant will want to know whether it is responsible for paying for existing security measures or providing its own security.

Tenants will want to know that it is a secure parking lot, but they’ll also want to know whether they have to pay for security, either in CAM charges or a stand-alone charge, or if the owner will cover the cost. A tenant might also insist on adequate lighting. Without lighting, parking spaces are useless at night for tenants, especially tenants that run restaurants or movie theaters that stay open late. A big point that tenants negotiate is who will pay for security and lighting [Clause, par. 3].

Providing Adequate Maintenance

A tenant will also want to negotiate the cost of parking area maintenance, specifically whether it’s included in CAM charges, and who will be providing the maintenance. Set a definition in the lease so it’s clear from the beginning of the landlord-tenant relationship who’s responsible for things like snow and ice removal, where to store snow in the parking lot, picking up debris, or fixing the parking surface [Clause, par. 4].

A tenant doesn’t want to move in and find out after the fact that the lease is silent about parking lot maintenance. Expect an experienced tenant to notice if there’s nothing in the lease regarding snow removal and other maintenance and ask you to put in a sentence that says you’ll be responsible for keeping the parking area clean.

Setting and Enforcing Rules

It’s very important to give yourself the right in the lease to establish and enforce reasonable rules and regulations concerning the maintenance, management, use, and operation of the parking area and to require tenants and their employees to follow these rules and regulations [Clause, par. 5]. Be wary of tenants that require you to enforce those rules against other tenants or that want the right to enforce the rules.

Compensation for Loss of Use

There will be times when for one reason or another you’ll need to block some or all of the parking area from use—for example, to repave a section of the lot. Reserve the right to temporarily close any part of the parking area for maintenance, alteration, or improvement purposes [Clause, par. 6]. A tenant could ask you to insert a provision in the lease providing that if you deny the tenant the right to use a portion of the parking area for a certain number of days during the course of a particular 365-day period, the tenant should be compensated for the loss of business.

Insider Source

Sujata Yalamanchili, Esq.: Hodgson Russ LLP, The Guaranty Building, 140 Pearl St., Ste. 100, Buffalo, NY 14202; www.hodgsonruss.com.