Eminent domain is the right of government to take private property. Historically, eminent domain was limited to taking private property for public purposes. However, the US Supreme Court expanded eminent domain to include taking private property for private uses. In most cases, property owners are compensated for "takings" through eminent domain.

Issues related to leasing retail space include who retains compensation for a leasehold estate, what happens if eminent domain takes an amount of parking which makes operation of the Senate Set Retail Center impractical and are there any rent abatements during construction related to a partial taking of the retail center.

A leasehold estate is a tenant's interest in real estate obtained through a lease. A leasehold estate becomes meaningful when contract rent is substantially lower than market rent. Having the right to use retail space for a payment well below market rent has value. In the event of a complete taking up (when the government takes the entire retail center) the lease needs to address proceeds of the tenant's leasehold estate. Do they belong to the tenant or to the landlord?

In any "partial taking", the government only takes a portion of the retail center. This may or may not include any portion of the building. For the sake of discussion, let's assume a retail center with 10,000 ft.² and 50 parking spaces. The 50 parking spaces are in two rows of 25. One row is along the street and one row is along the front of the building. The current amount of parking is just barely adequate. The condemnation will "take" the 25 parking spaces along the street. This leaves the property with only 25 parking spaces, or about half of what is necessary. The lease needs to define the rights and responsibilities of both the tenant and the landlord in event of a partial taking.

Consider addressing the payment of rent during road construction related to eminent domain. Most leases are silent on this point. In many cases, the loss of business due to construction is not compensated. The landlord must pay his expenses and mortgage payment during construction. The tenant's sales often decline precipitously during construction. There is no easy answer to equitably address this issue.