Lease Airport Retail Space: A Comprehensive Guide

Leasing airport retail space is a unique process, with airports typically owned by a governmental entity or authority that may choose to lease out the retail/restaurant space to be developed as a shopping centre to a separate entity. This entity could be a developer or a concessionaire that will operate the entire shopping centre. Leases are often percentage-based or non-traditional, with prevailing wage stipulations, and airports seek out strong local brands that represent the area well. Airports are also hyper-focused on security, which can create logistical hurdles concerning supply and the products that can be sold.

How to negotiate a reduction in rent

Leasing airport retail space is typically handled by a county's real estate consultant, but on occasion by a master lessee like an Aramark or developer. Airports are usually owned by a governmental entity or authority that may choose to lease out the retail/restaurant space to be developed as a shopping centre to a separate entity. When that entity is a developer, they act as a landlord of the shopping centre, dividing the space and subleasing individual spaces to tenants.

Before spending a significant amount of money, time and resources building out a retail or restaurant space in an airport, a tenant will want to obtain a non-disturbance or recognition agreement with the airport owner that says the tenant can continue to operate its business in the airport under the terms of the lease, even if the developer breaches its lease with the airport owner.

Another aspect specific to negotiating airport leases is a clause that would adjust a tenant’s rent if enplanements fall. Enplanements refer to departing passengers and are part of how foot traffic is calculated in airports. Lower traffic equals lower sales, so this is especially important if an airline cuts routes or if an airport that was a hub for a particular carrier loses that status.

• Be willing to offer something in exchange for a better rate. For example, you could pay rent ahead of time, sign a longer lease, or agree to a unit that hasn't been renovated yet.
• Ask for a realistic reduction based on the going rental rates in your neighbourhood. Do some research on the nearby rental market to justify a lower cost.
• If comparable units and amenities are available at a lower price, use this to negotiate your rent. Provide supporting data in your rent reduction letter as leverage, showing that you can move out of your current place and into a cheaper property if needed.
• Offer to give up your parking space if you don't have a car, promise not to smoke in the apartment, or promise not to keep cats even if they're allowed.

How to obtain a non-disturbance or recognition agreement

Leasing airport retail space is typically handled by a county’s real estate consultant, but on occasion by a master lessee like an Aramark or developer. Airports are usually owned by a governmental entity or authority that may choose to lease out the retail/restaurant space to be developed as a shopping centre to a separate entity. When that entity is a developer, they act as a landlord of the shopping centre, dividing the space and subleasing individual spaces to tenants.

Before spending a significant amount of money, time and resources building out a retail or restaurant space in an airport, a tenant will want to obtain a non-disturbance or recognition agreement with the airport owner. This agreement states that the tenant can continue to operate its business in the airport under the terms of the lease, even if the developer breaches its lease with the airport owner.

A non-disturbance agreement, also known as an "adverse possession" agreement, is a contract between two parties that allows one party to use the property of another without being disturbed. This is usually done for residential properties. It is important that landlords have a legal notice on their premises stating that they are protected from claims of damages due to negligence, nuisance, and interference by tenants. In order to avoid disputes between the parties, it is recommended that this agreement be drafted up before signing any lease agreements. A non-disturbance agreement protects one party's interest in property, such as an apartment or a lease, by preventing the other party from interfering with the first party's use of that property.

In a subleasing context, an agreement is usually between a prime landlord and a subtenant. Sometimes third parties with an interest in the real property are also signatories to the agreement, such as a ground lessor or the prime landlord's lender. An NDA primarily sets out the understanding between the parties concerning their respective rights and obligations to each other if the primary lease terminates because of a tenant default not caused by the subtenant. The subtenant typically requests an NDA during the negotiation of the sublease. An NDA generally includes the prime landlord's agreement that if the prime lease is terminated due to the tenant's default, the prime landlord must not disturb the subtenant's possession.

To obtain a non-disturbance or recognition agreement, a tenant should consider requesting that a landlord and the landlord’s lender enter into a subordination, non-disturbance and attornment agreement, commonly referred to as an “SNDA”. Subtenants may want to request that prime landlords enter into recognition agreements. An SNDA is a tri-party agreement between a tenant, landlord, and landlord’s mortgagee under which the tenant agrees to subordinate its lease to the mortgagee’s lien in exchange for the mortgagee’s agreement to honour the terms of the lease if the mortgagee forecloses on the property.

How to adjust a tenant's rent if enplanements fall

Airports are typically owned by a governmental entity or authority that may choose to lease out the retail/restaurant space to be developed as a shopping centre to a separate entity. When that entity is a developer, the developer acts as a landlord of the shopping centre, dividing the space and subleasing individual spaces to tenants.

Leases are often percentage or non-traditional with prevailing wage stipulations. Airports seek out strong local brands that represent the area well instead of trendy national brands.

Before spending a significant amount of money, time and resources building out a retail or restaurant space in an airport, a tenant will want to obtain a non-disturbance or recognition agreement with the airport owner that says the tenant can continue to operate its business in the airport under the terms of the lease, even if the developer breaches its lease with the airport owner.

A clause in the lease agreement can be added to adjust a tenant’s rent if enplanements fall. Enplanements refer to departing passengers and are part of how foot traffic is calculated in airports. Lower traffic equals lower sales, so this is especially important if an airline cuts routes or if an airport that was a hub for a particular carrier loses that status.

If you are a tenant, one way to begin negotiations is to remind the landlord that you have been a good tenant, and that finding new good tenants is hard. Some other options you can suggest while negotiating include: Offering to sign a longer lease term at your current rate in return for not raising the rent. Asking for something in exchange, such as an upgraded appliance or covering a utility bill. Telling your landlord how much of an increase you can afford, and offering to meet in the middle. Requesting more time before the rent increase takes effect so you may prepare and adjust your budget.

If you are a landlord, you should be informed, prepared, and, above all, compliant with the legal expectations of your jurisdiction. You should also be aware of the market rates and tenant satisfaction. You are typically legally obligated to notify tenants before increasing rent. Most jurisdictions require a notice period—usually 30, 60, or 90 days—to ensure tenants have ample time to prepare for the change.

How to deal with logistical hurdles concerning supply and products

Airports are typically owned by a governmental entity or authority that may choose to lease out retail or restaurant space to be developed as a shopping centre to a separate entity. When that entity is a developer, they act as a landlord, dividing the space and subleasing individual spaces to tenants.

Before spending a significant amount of money, time and resources building out a retail or restaurant space in an airport, a tenant will want to obtain a non-disturbance or recognition agreement with the airport owner. This agreement states that the tenant can continue to operate its business in the airport under the terms of the lease, even if the developer breaches its lease with the airport owner.

Another aspect specific to negotiating airport leases is a clause that would adjust a tenant’s rent if enplanements fall. Enplanements refer to departing passengers and are part of how foot traffic is calculated in airports. Lower traffic equals lower sales, so this is especially important if an airline cuts routes or if an airport loses its status as a hub for a particular carrier.

Airports are settings unlike most other retail spaces in that they are hyper-focused on security and, therefore, have certain logistical hurdles to cross concerning supply and even the products you can sell. With space at a premium, not every store has an equal amount of square footage. Airports seek out strong local brands that represent the area well instead of trendy national brands.

How to find out who owns the airport

Airports are typically owned by a governmental entity or authority that may choose to lease out retail or restaurant space to be developed as a shopping centre to a separate entity. When that entity is a developer (as opposed to a concessionaire that will operate the entire shopping centre), the developer acts as a landlord of the shopping centre, dividing the space and subleasing individual spaces to tenants.

Before spending a significant amount of money, time and resources building out a retail or restaurant space in an airport, a tenant will want to obtain a non-disturbance or recognition agreement with the airport owner that says the tenant can continue to operate its business in the airport under the terms of the lease, even if the developer breaches its lease with the airport owner.

Another aspect specific to negotiating airport leases is a clause that would adjust a tenant’s rent if enplanements fall. Enplanements pertain to departing passengers and are part of how foot traffic is calculated in airports. Lower traffic equals lower sales, so this is especially important if an airline cuts routes or if an airport that was a lease for a particular carrier loses that status.

Leases are often handled by a county’s real estate consultant, but on occasion by a master lessee like an Aramark or developer. Generally speaking, an airport’s merchandise or lease plan is similar to a mall in that they want tenant turnover every 3-5 years. Leases are often percentage or non-traditional with prevailing wage stipulations etc.

Frequently asked questions