- All About Parking: Behind the Wheel with the Tenant
- July 15, 2003 | Author: Roseleen P. Rick
- Law Firm: Troutman Sanders LLP - Richmond Office
Have you ever pulled into a strip shopping center only to find there were no parking spaces available? How many times have you endlessly circled a parking deck to go to a doctor's office connected with a hospital? Let's not even talk about Christmas shopping at a large mall! And then there are the signs - reserved parking, compact cars only, delivery trucks between 8 am and 6 pm, towing at owner's expense, etc., etc.
Parking provisions are a critical aspect of a lease whether the lease is for retail, office, manufacturing, hotel, restaurant, or any other space. We travel by car and when we arrive at our destination, we need to park. If parking becomes a problem, we end up going to an alternate destination where parking is available. If customers do not have easy and adequate parking available, the profitability of the merchant will be affected. There are provisions that can be included in a lease to protect a tenant and its employees, customers and business invitees.
The examples given will be applicable to most commercial leases. Office uses can be substituted in place of retail locations. Restaurants and theatres present slightly different problems, but the underlying analysis is the same. Retail sales, most services, and entertainment depend on customers.
Zoning, Restrictive Covenants and More
The attorney for the tenant needs to examine any zoning requirements, restrictive covenants, proffered conditions, any applicable subdivision plan, and government regulations before addressing the parking issues in a lease. These may provide a clue to any parking requirements imposed on the landlord and those requirements can be reflected in the lease to benefit the tenant. Be sure to include a provision in the lease where the landlord covenants that it is in compliance with all laws, ordinances, requirements of governmental authorities. Here is a sample provision:
A. Landlord represents and warrants to Tenant that the Leased Premises and the [Shopping Center, Office Building] are in compliance with all laws, ordinances, orders, rules, regulations, and other governmental requirements relating to their use, condition, and occupancy (including parking), and all rules, orders, regulations, and requirements of any governmental authority having jurisdiction over the premises and the building of which the Leased Premises are a part.
Parking Defined in the Lease
To the extent possible, define the parking area in the lease. If it is critical that the tenant have twenty spaces, include the 20 spaces in the definition of leased premises. If the leased premises are part of a shopping center, strip mall, or other multi-user space, use a plat and outline the area that is to be reserved for the tenant and attach that plat to the lease. If the tenant's parking needs are dictated by the square footage of the leased premises, tie them together so that for each "X" square foot of leased area, the tenant is entitled to "Y" parking spaces.
The following are some examples of how the parking area can be addressed (note that a Landlord would likely only agree to example C for a strong anchor tenant):
A. Tenant and its employees and customers shall have the non-exclusive right, in common with Landlord, other tenants of the Building, and their respective employees, guests and customers, to park automobiles in the parking area provided by Landlord as shown on the plat attached to this lease, subject to such reasonable rules and regulations as Landlord may impose from time to time, including the designation of specific areas in which automobiles of Tenant, its employees, guests and customers must be parked. Provided, however, it is agreed that Tenant shall, at all times, have the use of at least X spaces; or
B. Landlord hereby dedicates and grants to Tenant, its employees, agents, suppliers, customers and invitees, a non-exclusive right at all times to use all the Common Area, including the parking areas, as shown on Exhibit "A", for parking and for ingress and egress between the Premises and all other portions of the Center and the adjoining streets, alleys and sidewalks; or
C. Landlord covenants and agrees that at all times during the term of this Lease, and any extensions thereof, to provide and maintain a surfaced parking area substantially as shown on Exhibit "A" and of sufficient area to provide: (i) a minimum ratio of at least seven (7) cars per one thousand square feet of gross leaseable area in the Premises within the area labeled as "Preferred Parking Area" on Exhibit "A"; and (ii) a minimum ratio of at least five (5) cars per one thousand square feet of gross leaseable area for the remainder of the Center, excluding those parking spaces within the Preferred Parking Area. In the event the parking area furnished should at any time be ___% less overall or ___ less within Tenant's Preferred Parking Area, and such deficiency of parking facilities shall continue for thirty (30) days after written notice thereof is received by Landlord, the Tenant at its option shall have the right to terminate this Lease, provided that the termination of the Lease for such a default may be prevented and the Lease reinstated by Landlord curing the Common Area (including the Parking areas and out parcels) so as to obstruct the view of the Premises from the Common Area or from the adjoining public streets; or
D. Tenant and its employees and customers shall have the non-exclusive right in common with Landlord, other tenants of the Building and their respective employees, guests and customers, to park automobiles in the parking area provided by Landlord, subject to such reasonable rules and regulations as Landlord may impose from time to time, including the designation of specific areas in which automobiles of Tenants, its employees, guests and customers must be parked. At all times Tenant shall have 29 designated parking spaces apportioned between the front and back parking lots.
In some lease situations, it is critical for the tenant to have the ability to label its designated parking spaces. The landlord may want to restrict the type of signs permitted and may require that any sign be of a certain size and located only in a specified area. "Parking only for _________" signs are frequently painted on the asphalt, curb bumpers or on adjacent walls. The lease should be clear on what is permitted and should also address who is responsible for maintaining the signs. If there are towing issues, get them fully set forth in the lease. The following are examples of signage provisions:
A. Landlord hereby grants to Tenant the right to maintain and replace signs on the Parking Area designating such areas as additional available parking for the benefit of Tenant. The location and size of such signs shall be subject to Landlord's prior approval, which approval shall not be unreasonably withheld; or
B. Tenant shall have the right to designate its parking areas by numbering the parking spaces, erecting a sign on the wall reserving those numbered spaces, and painting "Reserved" on the floor surface of each space. Tenant shall have the right to have towed any vehicles violating the reserved parking restrictions.
Rules and Regulations
It is not unusual for the landlord to promulgate rules and regulations related to parking. The landlord, in a move to protect all of its tenants and keep the facility economically beneficial to all, wants to make sure that parking closest to the building is available for customers and business invitees. To that end, the rules and regulations may limit where employees can park, where delivery trucks can stop and off-load, and how long a parking space may be used. Cars parked in violation of the rules and regulations may be towed. If there are rules and regulations, attach them to the lease. If they are not available at the time of signing of the lease, provide that they will be enforceable against the tenant only if the tenant agrees to them. The landlord should not have be able to establish rules and regulations after the lease has been signed and have the tenant obligated to comply with restrictions that did not exist when the lease was signed. Rules and regulations examples follow:
A. All automobile parking areas, driveways, entrances and exits thereto, and other facilities furnished by Landlord in or near the Shopping Center shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time to time to establish, modify and uniformly enforce reasonable rules and regulations with respect to all such facilities and areas provided that changes to the rules and regulations made after the date hereof, shall be subject to tenant approval; or
B. All automobile parking areas, driveways, entrances and exists thereto, and other facilities furnished by Landlord in or near the Shopping Center shall at all times be subject to the exclusive control and management of Landlord. Landlord has established rules and regulations, a copy of which is attached hereto and made a part hereof, with respect to all such facilities and areas; or
C. Tenant agrees to comply with such parking rules and regulations as Landlord may deliver to Tenant; provided that Tenant shall be given a reasonable opportunity to comply with any parking changes. Vehicles parked on or about the Premises in violation of such rules and regulations may be towed at the vehicle owner's expense; or
D. It is expressly understood that the parking areas are intended primarily for use by the customers of all the tenants in the building, and Tenant accordingly agrees that its employees will not use said parking areas for the parking or storage of automobiles, trucks or any other vehicles owned or used by any such employee and will only park in such areas as may from time to time be reasonably designated by Landlord for employee parking. In order to assist Landlord in the enforcement of the foregoing provision, Tenant agrees that within fifteen (l5) days after being requested by Landlord so to do, Tenant will furnish to Landlord a written statement containing the names of all employees, agents and representatives employed by Tenant in or about the Leased Premises and the license numbers of all vehicles owned or used by Tenant or such employees, agents or representatives.
Maintenance and Repair
As with the primary leased premises, it is critical to have clear provisions regarding who has the responsibility for maintaining and repairing the parking areas. The tenant will want the landlord to keep the parking area clear of debris, snow, ice, leaves, etc. The tenant will also want the landlord to maintain and repair the surface, keep the parking area graded and drained, and routinely re-stripe the surface. Depending on the type of facility, the landlord may be able to shift some of the responsibility for maintenance and repair to the tenant. The landlord may want the tenant to contribute to the cost of maintenance and repair. This can be handled by a separate charge or included in common area maintenance fees. The tenant's lawyer needs to carefully examine any cost sharing to assure that the tenant is paying only its equitable portion. Here are a couple of examples:
A. Landlord agrees and covenants that at its expense during the term of this Lease, it will retain the size of the parking areas and means of ingress and egress and maintain the same in good order and repair, and free from ice, snow and debris; or
B. Landlord shall also provide maintenance of the Building and its appurtenant grounds and facilities (the "Project"), including, but not limited to, parking lot repairs which shall include re-stripping and re-surfacing the parking lot so as to maintain the Project as a first class retail facility; or
C. Tenant shall pay Landlord, as additional rent, Tenant's Percentage (hereinafter defined) of all costs of operating and maintaining the common areas applicable to the term of this Lease, including, but not limited to, parking lot and street lighting; repairs and maintenance to the parking lot, including cleaning and striping, snow and ice removal; the costs and expenses of maintaining the landscaped areas (including grass cutting, planting, fertilizer, replacing flowers and shrubbery, and repairs and maintenance to the lawn sprinklers); and electricity, water and sewer charges for the common areas. Such payment shall be made by Tenant within ten (10) days after receipt of a statement showing the amount due.
Because lighting is so critical from a security point of view, it must be addressed in the lease either as part of the maintenance and repair or as a separate provision. The issue of security and liability will not be covered here except to point out that failure to light is asking for a lawsuit. A grocery store tenant in a large shopping center will want to have parking lot lighting available long after the shopping center is closed and long before it is open in the morning since deliveries are made and shelf-stocking by its employees is done very late at night and very early in the morning. It is important to know the needs and business of your tenant client to make sure that issues that relate to safety are adequately covered. Below are lighting provisions:
A. Twenty-five percent (25%) of the overall parking area lighting shall be designated as security lighting (i.e., remains on from dusk to dawn). The security lighting layout and pattern shall be subject to Tenant's approval. Selection of fixture types shall be subject to Tenant's review and approval prior to design and circuiting. Landlord shall install a seven-day time switch to control all parking area lighting wired to a common house panel. All security lighting shall be placed on photocell switching. The control of parking area lights shall be accessible to Tenant's local store management due to late-night and holiday sales; or
B. Landlord agrees to provide and maintain lighting in the area of the parking lot closest to the service entrance on those six poles designated on Exhibit ___ attached hereto.
The attorney also needs to determine the likelihood of a portion of the parking lot being condemned or taken in connection with the expansion of an adjoining roadway. If there is a taking of a portion of the parking area, it is important to include a mechanism in the lease that provides for alternative parking arrangements, proportions the available parking or, if necessary, allows the tenant to terminate the lease because of inadequate parking. Note the following provision:
A. Definition of Taking and Substantial Taking. For the purpose of this Lease, a "Taking" shall mean any condemnation or exercise of the power of eminent domain by any authority vested with such power or any other taking for public use, including a private purchase in lieu of condemnation by an authority vested with the power of eminent domain; the "Date of Taking" shall mean the earlier of the date upon which title to the Premises, the Shopping Center or any portion thereof so taken is vested in the condemning authority or the date upon which possession of the Premises, the Shopping Center, or any portion thereof is taken by the condemning authority; and "Substantially All of the Premises" shall mean (i) so much of the Improvements and/or Shopping Center and Common Areas as, when taken, leaves the untaken portion unsuitable, in Tenant's reasonable opinion, for the continued feasible and economic operation of the Premises by Tenant for the same purposes as immediately prior to such Taking or as contemplated herein, (ii) so many of the parking spaces within the Shopping Center as reduces the parking ratio below the greater of five (5) spaces (for full-sized automobiles) per 1000 square feet of ground-floor gross leasable area or that ratio which is required by the zoning ordinance applicable to the Shopping Center, and Landlord's failure to provide substantially equivalent alternative parking reasonably acceptable to Tenant within sixty (60) days after such Taking.
The issues relating to parking are slightly different when a tenant is dealing with space in a downtown area of a major city. Parking in those instances is always at a premium, and to some extent, parts of the above discussion are inapplicable. A major tenant in a downtown office building may be able to extract a few available parking spaces for top-level management and for its mailroom services. Those will come at a high price and should be addressed in the lease with detailed specificity.
As with all things in a lease (and most real estate transactions), it all comes down to bargaining power. An anchor tenant in a large shopping center is going to get many more lease concessions than the smaller tenant. The tenant that leases the most space in a strip mall will get the best parking deal. The tenant's attorney needs to make sure that even if the tenant has very little bargaining power, the tenant's basic parking needs are addressed and the tenant's customers have reasonable access to parking.