Danielle Lesser Featured in Commercial Observer on How Retail Leasing Terms Have Changed Since Covid-19

Danielle Lesser, partner and chair of our Business Litigation Department, was featured in a Commercial Observer article entitled “Retail Leasing Terms: What’s New Due to COVID-19?” In the April 26, 2022 Q&A, Danielle discussed the renewed interest in force majeure, the rise of rent abatements, and the current landscape of retail, post-pandemic.

In the article, Danielle discussed the interdependent interests of retailers and landlords and the tension involved from a legal standpoint. “What it looks like is an allocation of economic risk,” she said. “It all comes down to a complicated mix of paying rent, increasing foot traffic, making sure stores are open, making sure they can open. And there is a push and pull from a negotiating perspective.”

Danielle said that the consequences of the pandemic are “far-reaching and have impacted real estate in a lot of very unique ways.” For example, some landlords are now offering flexible rent in order to occupy retail space. She stated, “In a lot of cases, you’re seeing lower base rents with higher percentage rent. You’re seeing changes to the way gross sales are being calculated, so that landlords can benefit from increases in sales that their retail tenants are experiencing.”

Danielle also discussed “changes in provisions like force majeure clauses, which… used to just be boilerplate that nobody ever took a second look at,” but are now getting a “very, very careful look by landlords and tenants.” Retailers are also demanding rent abatement clauses and “insisting on provisions that talk about government shutdowns, pandemics that may interfere with their conducting their businesses as they normally would, and they’re looking for relief from that.”

In addition, Danielle talked about recent trends in retail, including traditional e-commerce brands opening brick and mortar stores and a change in the traditional mall model, which was once anchored by a couple of department stores and is now being built around a food court or restaurants “to create an experience to drive foot traffic.”

Read the full article in Commercial Observer here.