The pandemic has triggered a slew of changed for the commercial real estate industry, and lease structures are no exception. Gary Glick, a partner at Cox, Castle & Nicholson LLP, has spoken about new lease provisions that are on the table at retail lease negotiations. One push from tenants is to link rent to gross revenue to protect tenants in the event of further business closers due to COVID-19 .

"Many retail tenants are attempting to negotiate provisions in their leases providing that, if a COVID-19 restriction is imposed on their business after they have opened substantially all of their premises, they will retain the right to close or pay base rent based upon a percentage of their gross sales," Glick tells GlobeSt.com. "Landlords will want to incentivize such tenants to stay open despite the restrictions because maintaining a proper tenant mix is critical to achieve maximum synergy for the shopping center. In addition, it allows the landlord to continue to receive some rent and 100% of the tenant's share of taxes, insurance and common area expenses."

Landlords aren't without options to meet tenants half way on this issue. Glick recommends, for example, limiting the provision. "The landlord may attempt to negotiate a provision that limits the tenant's right to pay base rent based upon gross sales, or other types of alternate rent, if the tenant's gross sales do not decline by more than an agreed percentage due to Covid-19 restrictions," he says. "Although this is a fair request, it may be met with resistance by a tenant that argues that its sales would have increased much more significantly but for the COVID-19 restrictions."