Kentucky’s commercial real estate landscape is reaching new heights. Recently, plans for the state’s first large-scale data center, located in Jefferson County, were announced. With more complex businesses like data centers coming to Kentucky, lease agreements must cover new issues and risks. While these agreements can vary by property type, it’s important to pay attention to three key clauses.
Use and exclusivity rights
As Kentucky attracts more businesses, clear rules about building use become vital. Use and exclusivity rights are rules that spell out what businesses can do on your property. They are especially important if you own properties like shopping centers or office parks where multiple businesses operate. These clauses help keep a good mix of businesses and prevent unwanted competition.
Here’s what these clauses typically cover:
- What kind of business can operate there
- When the business can be open
- What activities aren’t allowed
- Whether a tenant has exclusive rights to sell certain items
- Rules about using common spaces
These guidelines help both property owners and tenants avoid confusion and commercial disputes down the road.
Sharing building costs
Kentucky’s weather can be tough on buildings, and different businesses have varying needs. This is where operating expenses and Common Area Maintenance (CAM) provisions come in. These terms explain how to split costs to keep common areas in good shape.
These provisions typically include:
- Clearing snow and maintaining landscaping
- Fixing parking lots
- Keeping building systems running
- Providing security
- Paying building insurance
Clear cost guidelines help both new and existing tenants understand what to expect.
Changing tenants
In this growing market, businesses need to move or change hands. Assignment and subletting provisions address these situations. These clauses explain whether and how tenants can let someone else take over their space.
Make sure to consider:
- When tenants can pass their lease to others
- How to get approval for new tenants
- Who’s responsible for rent payments
- Steps for screening new tenants
- Who’s liable if something goes wrong
Clear rules about changing tenants help protect your property while giving businesses reasonable options when they need to make changes.
Make sure your lease agreement works for you
Every commercial property is different. Working with an attorney helps ensure your lease agreements meet your specific needs.