Lease agreements for retail parks in Poland increasingly feature solutions that differ from classic Triple Net Lease agreements, particularly regarding operating cost settlement and responsibility division between parties. These trends are reshaping relationships between investors and tenants while responding to growing market expectations, explain Dominik Rafałko, Partner and Paweł Śliwka, Senior Associate at CMS Poland.
In commercial real estate, property owners typically use Triple Net Lease (NNN) agreements where tenants bear full operating costs including real estate tax, insurance, common area maintenance fees, and utilities, in addition to base rent. This model transfers cost risk from owner to tenant, making it attractive for investors and real estate funds.
However, there has been a growing number of deviations from the traditional operating cost settlement model in retail parks. Alternative settlement models now include cost caps (upper limits on tenant costs even if landlord's actual costs are higher), indexation (fixed fees that can only increase by agreed indices like inflation), and lump sum arrangements (fixed monthly fees not subject to actual cost settlement).
"Our analyses show that the above models are becoming increasingly common in retail parks, ceasing to be an exception reserved for the largest tenants, as is the case in large shopping centres," according to CMS lawyers.
Despite growing deviations from the classic settlement model, lease agreements in retail parks still essentially follow the Triple Net Lease concept. However, it is crucial to precisely define parties' responsibilities regarding leased space and common area maintenance, considering the specific characteristics of each facility. Proper regulation of these issues allows maintaining a settlement model that protects landlords against losses while making properties more attractive to investors.
