Commercial Landlords: Can They Convert Common Areas?

Updating or renovating your business property’s common spaces may provide legal challenges. Learn how to navigate the procedure by clicking here.

What you will discover:

What is a business building’s common area?
Can landlords use communal areas for other purposes?
Is it necessary for a landlord to give notice when changing common area spaces?
Can a landlord demand an additional rent or fee after improving common areas?

Common spaces in commercial rental buildings are normally available to all tenants and their visitors. Some properties may have many common spaces that fulfill various functions. There may be legal ramifications if you wish to remodel a communal room or convert an underutilized one to a private one. The following information will assist you in understanding your rights as a landlord when it comes to upgrading, renovating, and converting common spaces.

What is a business building’s common area?

A common space in a business building is one that is available to all tenants rather than being exclusive to a single tenant. The most typical examples of common areas are lobbies and corridors, which may be found in almost every office building. Restrooms, kitchens, conference rooms, and gyms are among more examples.

Common places are often governed by regulations. Tenants who wish to utilize a conference room, for example, may need to book the area ahead of time. Employees may get exclusive access to a gym or other communal space.

A list of common spaces or a definition of what comprises a common area is included in many leases. Tenants may also be given floor drawings or maps of the building, which show where common amenities are located and who has access to them. Documents that are not part of the Commercial Lease Agreement are not legally binding in most cases. However, in circumstances of uncertainty, such as when the lease broadly describes common areas rather than giving explicit specifications, they might be advantageous.

Can landlords use communal areas for other purposes?

What you can do with a common space as a landlord is limited by your Commercial Lease Agreements with your tenants. Leases often require renters to have access to certain facilities. There may also be more broad phrases that ban you from lowering services or making changes that may have an impact on:

There is a lot of foot traffic.
Visibility.
Parking is available.

If you remove a lease-required facility, you may need to cut the rent or offer the renter with a new amenity as a concession.

If a common area is not covered by a Lease Agreement, a landlord is typically allowed to adapt the space as they see fit. A conference room, for example, that is available to all tenants may be turned into rental office space. However, if the new use conflicts with existing tenants, there may be certain restrictions. If the noise would excessively upset adjoining office tenants, you may not be permitted to convert a ground-floor common area into a machine shop.

You may wish to think about practical issues like renter satisfaction. If you remove facilities that are typical in comparable buildings, your present and potential tenants may go elsewhere, resulting in a decline in lease renewals and lease signings.

Is it necessary for a landlord to give notice when changing common area spaces?

In general, unless the lease mandates it, you would not need to give notice of your intentions to convert common area space. Most Non-Residential and Commercial Leases that mandate notice for common area closures most likely only address temporary closures for reasons like as maintenance or renovations. Tenants that wish to ensure common area access often incorporate it in their lease. However, giving notice to a landlord is still a good practice.

If you wish to make improvements to lease-protected common spaces, you may find it simpler to do so around lease renewal time. You may specify a precise date for the conversion or declare the new conditions for shared spaces in the new lease.

If construction work will be done, you should consider the possibility of noise and other disturbances. In addition to giving notice, some leases limit the hours when noisy work may be done. A Commercial Lease, unlike a Residential Lease, may demand work to be done solely at night and on weekends rather than during business hours.

Can a landlord demand an additional rent or fee after improving common areas?

Depending on the conditions of your lease, you may be allowed to charge more if you turn a common room into a fitness center or another desirable feature.

First, determine if the agreement states that the renter has access to all communal spaces. This word may have been used when the facility had just minimal services, but it may now contain recent improvements. If the new update is covered by an existing lease condition, you will be unable to increase the rent or add a new cost unless the renter agrees. If the lease requires tenants to pay variable common area maintenance fees, the tenant may be required to pay any additional expenditures subject to any lease restrictions.

You may normally charge a fee for usage or negotiate a higher rent for anything not covered by an existing lease. You cannot usually increase the rent throughout the life of a lease without the tenant’s permission, but you also do not have to enable the renter to utilize additional services. For example, you may give existing renters the use of a new fitness facility in exchange for a $20 per employee per month fee increase or a 5% rate increase. The tenants may then decide whether or not to utilize the exercise facility.