Pass Through Off-Site Traffic Improvement Costs to Tenants

If, like many shopping center owners, you provide off-site traffic improvements for your tenants, you should make sure that you’re compensated for that. After all, these improvements—for example, special signage and lighting in areas leading to the property or a way to control the flow of vehicles into and out of the center—benefit both owners and tenants by helping increase customer traffic, boost sales, and reduce the risk of accidents.

If you want to make off-site traffic improvements, you should try to pass through the cost of installing, maintaining, and repairing them to your tenants. But a typical lease might not allow you to do this.

Instead of getting left with a potentially hefty bill, add language to the common area maintenance (CAM) cost clause to pass through to the tenant these off-site traffic improvement costs. You can do this by making sure that the list of CAM cost items in the lease includes all costs associated with off-site traffic improvements that you have made. To pass these costs through to the tenant, ask your attorney about using the following model language to your lease:

Model Lease Language

All costs associated with those improvements, systems, signage, equipment, and installations that are designated by Landlord to serve or benefit the Center by facilitating the flow of traffic into or out of the Center, whether or not located within, adjacent to, or near the Center.