Going Dark Provision

Going Dark Means Staying in the Lease While Ceasing Operations

'Going dark' is commercial real estate terminology for a tenant who stops operating at their location but remains legally liable under the lease — continuing to pay rent while the space sits vacant. This happens for various business reasons: a struggling retailer might close a poor-performing location while keeping the lease to prevent a competitor from taking the space; a restaurant might pause operations for renovations; a retailer might maintain a presence in a lease with a favorable future buyout option. Landlords hate going dark because a vacant space affects center traffic, undermines the other tenants, and may violate co-tenancy clauses that other tenants negotiated.

Most Commercial Leases Include a Continuous Operation Requirement

Standard commercial lease language for retail: 'Tenant shall continuously operate its business from the Premises during all normal business hours throughout the Lease Term, except for temporary closures due to renovation (not to exceed 30 days) or force majeure events.' This 'continuous operation' covenant means going dark — even while paying full rent — violates the lease. The landlord can declare you in default and pursue termination remedies even though you're paying rent. The practical effect: if your business can't sustain operations at a location, you have no clean option between continuing to lose money while operating and defaulting on the lease.

Why Landlords Insist on Continuous Operation

In percentage rent leases, going dark eliminates the landlord's percentage rent income — if you don't operate, you don't generate sales, and if you don't generate sales, the percentage rent provision produces nothing. For anchor tenants and anchor-adjacent tenants, dark space undermines center traffic and potentially triggers co-tenancy clauses for other tenants. A landlord with a center where several tenants have gone dark faces a cascading effect: reduced traffic, co-tenancy trigger activations, other tenant rent reductions, and a center that enters a death spiral. Continuous operation requirements are how landlords prevent that scenario from being a tenant's risk-free option.

Negotiating Going Dark Rights — When and How

If continuous operation is required by your lease, negotiate carefully. Your strongest position: negotiate a going dark right at lease signing as a defined right rather than something you'd have to beg for later. A going dark right might allow: 60 consecutive days per year of dark operations for renovation or transition; a triggered dark right if sales fall below a minimum threshold; or an indefinite dark right after year 3 if you've fulfilled all lease obligations. In exchange, the landlord might demand: elimination of any percentage rent minimum; a rent increase during dark periods; and immediate surrender rights — the landlord can terminate the lease if you go dark for more than a specified period.

The Landlord's Going Dark Remedies Are Often Severe

If you go dark without a contractual right to do so, landlords typically have a choice of remedies. They can terminate the lease (which may be your goal if the business is failing, but then you face full damages including remaining rent and re-leasing costs). They can seek an injunction forcing you to reopen and operate — courts have actually ordered tenants to reopen failed businesses under continuous operation clauses, which is rarely successful in practice but generates significant legal expense. Or they can claim damages for the economic harm caused by the dark space — reduced co-tenancy payments from other tenants, lost percentage rent, reputational damage to the center. Plan before going dark, not after.

Going Dark Versus Assignment and Subletting

If your business can't sustain a location but you want to avoid the costs of going dark or terminating, consider assignment or subletting as alternatives. Assigning the lease to a creditworthy new tenant (with landlord consent) transfers your obligations entirely. Subletting brings in a subtenant who pays you rent you use to offset your lease obligation. Either option may be more viable than going dark if the space has value. The challenge: assignment and subletting both require landlord approval, which may not be forthcoming if the proposed assignee or subtenant is in a category the landlord has already leased to another tenant.