For the past 12 to 18 months, office building owners have been energetically implementing new tactics to attract tenants back to their buildings as the pandemic becomes less impactful.  One growing trend among owners is hiring outside vendors to provide added-value building amenities for tenants, such as conference room services, fitness centers with nutritionists, and unique food and beverage offerings.  One of our landlord clients even enters each tenant traveling through the building lobby into a lottery for NFL tickets. These new amenity relationships, however, are complex and in some cases do raise certain legal issues. 

In certain cases, these amenity operations may be structured as leases or license agreements, where the vendor bears all operating expenses and retains the revenue from the business–other than rent or fees payable to the building owner. However, in many cases, the structuring of these arrangements may find office tower landlords outside their comfort zone. Rather than using traditional lease documents to seal these deals, these arrangements are generally documented as management and consulting arrangements, akin to those used by hotels with their providers of spa and health services, restaurants, and catering. 

In fact, landlords may find themselves negotiating with a counterparty that expects to apply provisions typically associated with the hospitality industry, which may concern a traditional office landlord. For instance, a hotel owner often gives an in-house manager a high degree of discretion, authority, and control to run operations at the owner's expense. If an office vendor expects to mimic this structure, landlords will have to determine their comfort level with embarking outside their usual rental practices. Other vendors without hotel experience may have different expectations. So, landlords would be wise to expect a range of negotiation approaches from different vendors. 

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.