Perimeter and Outparcel Redevelopment in Retail Centers: Due Diligence and Documentation

Description

A retail center may not be functional in the manner initially configured. A big box tenant moves out, large parking lots are no longer necessary or customers’ needs change. This often leads to a redevelopment involving dividing single spaces into multiple spaces, aggregating or reconfiguring outparcels, carving out or spinning off portions of a development to third parties, and combinations of any or all of these approaches.

There are often use and other restrictions in an REA. The extent to which an REA requires amendment will depend on the level of change contemplated, the exiting parties, property to be added or removed, and other factors. Counsel must check leases and deeds in the chain of title for any restrictions, including consent or purchase rights, and review recorded site plans that may show drive-throughs, height restrictions, or curb cuts impacting further development.

Developers can divide former big-box stores into smaller tenant spaces that anchor a perimeter development or raze a store to create new perimeter development. An anchor or big box owner may want to develop an outparcel on its property in the center. Agreements should delineate relationships, perhaps with new REAs between different owners within the perimeter center or between the owners of the larger center and the outparcel or perimeter center.

Listen as our authoritative panel explores these and other issues that owners, tenants and purchasers may encounter in redeveloping outparcels in a retail center. The presenters will discuss addressing restrictions on the development parcel, overcoming issues with dividing parcels or buildings for multiple tenant uses, and more.