Background
A New Hampshire-based wholesale and warehousing company needed additional space and planned to lease a larger building. The proposed lease was lengthy, complex, and structured as a triple-net lease, requiring the tenant to pay a share of common area maintenance expenses, taxes, and insurance.
Key Issue
Several provisions created significant financial risk:
- The building had no separate electrical meters, despite varying energy usage among tenants.
- The lease required tenants to pay for major capital items, including plate glass windows, internal pipes and ducts, and rooftop mechanical systems.
- There was no adequate catastrophe clause to protect the tenant if a disaster adversely impacted business operations.
Resolution
We negotiated several key revisions:
- A new electricity cost formula based on an electrician’s use analysis.
- A shared plan among tenants to install separate electrical meters.
- A reallocation of capital items expenses to the landlord.
- A catastrophe clause allowing rent abatement if an uncontrollable event reduced gross sales by 25% or more for over 90 days.
These changes created a more balanced, fair and practical lease for the business tenant.