Thinking Outside of the Big-Box: Understanding License Agreements

Although permanent anchor and inline tenants are the backbone of a successful shopping center and are critical to a property's stability and ability to attract and retain institutional investors, versatility and flexibility are becoming more and more important. The International Conference of Shopping Centers (ICSC) has recently published a comprehensive analysis of the current retail environment in a report titled, “Envision 2020.” The ICSC distills various innovative themes in this report that are guiding retail real estate to a brighter future. One critical component to the successful evolution of a shopping center is creating a stronger connection with community through attractions, events and promotions that bring a fresh vibrancy to the centers. Many shopping centers are hosting community events, such as concerts, art shows or other performances, and forming partnerships with community organizations featuring activities such as yoga classes, health fairs or traveling expositions. These specialty relationships and other short-term relationships are generally memorialized in a license agreement rather than a traditional lease.

License Agreements Help Achieve Versatility

License agreements are typically used for shared-space, shorter term arrangements or temporary occupancy. They are commonly used for kiosks, carts or RMUs (retail merchandising units), seasonal promotions, pop-up leasing and other specialty leasing arrangements. Shopping center owners also typically use license agreements to memorialize advertising and marketing deals, such as digital media, sponsorships, specialty or seasonal promotions, or vendors or businesses hosting events within a shopping center.