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Wins & Insights

Tenant Leasing Illustrated – June 2014 – What’s In a Name?

What’s In a Name?

“What’s in a name? That which we call a roseBy any other name would smell as sweet.”

– Romeo and Juliet (II, ii, 1-2)

When they were barely more than toddlers, each of my three children were so intent on winning that they had no compunction about cheating at Candyland and other kiddie board games.

Before you start making genetic disparagements about the offspring of lawyers (if you prick us, do we not bleed?), my informal and extremely unscientific survey has found that most toddlers start cheating at an early age. Competition just seems to be inbred in us.

How do office tenants feel about competition? Glad you asked.

Some tenants do not mind (and may even welcome) having rivals from the same industry in their building or office complex, thinking it may create a hub or campus for that particular industry. Other tenants will not want their competitors anywhere near them and certainly not in the same building.

However, notwithstanding how they may feel about having their rivals leasing in the same building, I can guaranty that Microsoft will not want to lease in the “Google Building” and JPMorgan Chase will not want to lease in the “Citibank Building.”

What’s in a name? For tenants, often plenty.

Yet, unless you are a tenant with a huge amount of leverage, there will not be much you can do about it.

Sometimes, albeit in rare circumstances, a tenant may find itself in a position to have some control over the name of its building. This is usually because the tenant is taking a very large amount of space (or all or a significant portion of the space in the building) or for some other reason has a lot of leverage when negotiating its lease.

If you find yourself in a position where you can influence the name of your building, follow these five suggestions. Though this be madness, yet there is method in it:

  • Have the landlord name the building after you. This is no doubt the simplest but most difficult solution to accomplish for this problem, even for a “gorilla” tenant. But if it is possible and achieved, it certainly precludes your being in a building named for a competitor.​
  • Try to obtain consent rights. In rare circumstances, a landlord may agree not to change the name of the building without your consent, generally subject to the requirement that you not unreasonably withhold, delay or condition such consent.​
  • Exclude competitors. Your landlord may not be prepared to name its building after you, or to grant you consent rights, but if you have enough leverage it might agree not to name the building after a direct competitor. This avoids the concern of Microsoft that it not end up in the Google Building.​
  • Expect “competitors” to be narrowly defined. Landlords resist any limitations on their ability to lease now and in the future. Your landlord will not want to lose an opportunity to land a large or influential tenant in the future if it can seal the deal with the building name, but sometimes the landlord doth protest too much, methinks, and it may agree to such limitations in limited circumstances with respect to a defined set of your direct competitors.​

○   Define competitors by industry. The broader the definition of “competitor” then, it must follow, as the night the day, that you will retain more influence over the building name. We have seen broad definitions such as “a commercial bank or diversified financial services company” and “an entity whose principal line of business is print or digital publishing.” Some leases will define principal line of business based on a percentage of revenues being generated by such activity.​

○   Specifically named competitors. Many landlords will insist that rather than use a broad definition of an industry, you be obligated to specify a list of three, five, seven or some other agreed upon number of particular competitors. If you agree to a limitation based on a specified number of named competitors, make the list broad enough to be meaningful and be sure to obtain the right to replace competitors over the term of your lease since your competition may change over the term.​

○   Beware related entities. Even if your landlord agrees to limit direct competitors, it may look for an exception for affiliates and related entities of your competitors. This can be dangerous if the affiliates or related entities have similar names. One solution is to exclude both the competitor and its “brand name” affiliates or related entities.​

  • Expect certain minimum requirements. In the event your landlord agrees to provide you with influence regarding naming rights, you should expect that you will need to meet certain prerequisites or standards:​

○   Expect an occupancy requirement. Your landlord may agree to provide such rights when you occupy all or a large portion of its building, but do not expect to retain this rights if your footprint shrinks. Although you will need some flexibility, your landlord will reasonably expect that you remain a significant (if not the most significant) tenant in the building.​

○   Your landlord will not grant these valuable rights while you are in default. This is reasonable if you are “then” in a “continuing” default (so you are not penalized after curing such default), “after the expiration of applicable notice and grace periods” (so that you have an opportunity to cure), and if the defaults are limited to “monetary or material non-monetary” defaults (so that you are not in danger of losing such a valuable right because of a dispute regarding a relatively minor default).​

○   These rights may have to remain personal to the “Tenant”. Your landlord may be willing to grant these rights to you, but not your assignees or subtenants. You will need to make sure that there is an exception for “successor entities” (i.e., entities with which you merge or which purchase all or substantially all of your equity interests or assets).​

Keep in mind that exterior signage does not in and of itself constitute building naming, but signage itself is a broad topic for another newsletter.

This above all: to thine own self be true. Bill S. was certainly correct about that and what better way for a tenant to avoid feeling like second fiddle in its own building than to retain influence over the name of its building and keep competitors at bay. Of course, the Bard also said “the first thing we do, let’s kill all the lawyers”, so don’t believe everything you read.