CRE glossary
Kick-out clause
A kick-out clause is a lease provision that gives either party (most often the tenant) the right to terminate the lease early if a defined performance threshold is not met. In retail leases, the threshold is usually a minimum sales target by a specified date; in office or anchored-center leases, it's tied to anchor occupancy or co-tenancy levels.
The classic retail kick-out: a tenant signs a 10-year lease with a sales kick-out that allows termination if Year 3 gross sales fall below $X. The threshold is usually 70–80% of the tenant's projected sales.
Co-tenancy kick-outs tie the tenant's right to terminate (or reduce rent) to the continued presence of a named anchor or to overall center occupancy staying above a threshold.
Landlords resist kick-out clauses because they introduce real exit risk. They're typically granted to credit anchors, inline tenants in centers where the landlord is filling space, or tenants signing in challenging environments.
Example
- Retail sales kick-out
- Year 3 sales ≤ $1.5M (projected $2M)
- Notice window
- Within 90 days of year-end
- Anchor-tied kick-out
- Anchor dark > 12 mo OR occupancy < 65%
- Reduced rent if triggered
- 50% of base until restored
Broker perspective
Kick-out clauses are insurance policies for retail tenants and inline tenants in anchored centers. The trigger threshold should be set at 75–80% of break-even sales, not projected sales — you want the option to bite at the right moment.
Frequently asked
People also ask
Kick-out vs termination option?
Termination option lets you exit at a date for any reason. A kick-out only triggers if a specific condition fails.
Typical sales threshold?
70–80% of projected sales. Set lower than projection so the trigger only bites in real underperformance.
Can a landlord have a kick-out?
Yes. Tenants generally resist these because they undermine lease security.
Kick-out vs co-tenancy clause?
Co-tenancy reduces rent when an anchor leaves; a kick-out gives the right to terminate. Often both exist in the same lease.
Related terms
Co-tenancy clause
Retail tenant's right to reduced rent (or termination) if anchor tenants leave or shopping center occupancy drops below a threshold.
Termination option
A negotiated right that lets a tenant exit the lease early at a defined date, usually in exchange for a penalty payment.
Anchor tenant
The largest, most credit-worthy tenant in a multi-tenant property — usually drives traffic to the rest of the building.
Percentage rent
Additional rent owed when a tenant's gross sales exceed a contractual breakpoint — most common in retail leases.
See kick-out clause extracted from a real lease.
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