Why a Well-Maintained Parking Lot is Critical for Retail Lease Negotiations & Liability Risk Management

When retailers evaluate leasing space in a shopping center, the parking lot is just as important as the interior space. While many landlords focus on the fit-out costs and location, they often overlook how a poorly maintained parking lot can derail lease negotiations, impact property value, and expose them to serious legal and financial risks—especially when it comes to ADA compliance and trip-and-fall lawsuits.

I cannot tell you the amount of times I have been in the middle of lease negotiations with a shopping center owner trying to help them bring the parking lot up to a required standard the prospective tenant is looking for.  It's much easier to add some fresh striping, update the handicap signs or fill a few thousand feet of cracks vs. milling and paving the lot to bring it up to a serviceable condition.

Landlords requiring a new tenant to "assume maintenance responsibility" of the parking lot will have a hard time getting them to accept it unless it's condition is in good - excellent condition. 

For both landlords and tenants, keeping the parking lot and sidewalks in top condition is not just a matter of aesthetics—it’s a legal and financial necessity.

As retail landscapes shift and big-box retailers close locations, shopping centers are often left with vacant or “dark stores”—properties that may eventually reopen, be leased to a new tenant, or be sold. While landlords and property managers focus on securing new tenants, one major capital asset is often overlooked: the parking lot.

A neglected parking lot can kill lease deals, devalue the property, and expose owners to major liability risks. Whether a retailer is looking to lease the space, a landlord is marketing the property, or an investor is considering a purchase, the condition of the parking lot is a critical factor in negotiations.

The Rise In Dark Stores Since COVID

The COVID-19 pandemic has significantly accelerated the trend of retail store closures across the United States, leading to a substantial increase in vacant or "dark" retail properties. Several factors have contributed to this phenomenon, including a shift toward e-commerce, financial challenges among retailers, and changing consumer behaviors.​

Rise in Store Closures

Predictions indicate that up to 45,000 brick-and-mortar stores could shut down over a five-year period due to rising costs and changing consumer habits. Major retailers such as Big Lots and Dollar Tree have announced plans to close over 1,500 stores in 2025 alone. Similarly, specialty retailers like JoAnn Fabrics and Crafts are undergoing significant closures, with JoAnn planning to shut down 530 locations nationwide as part of a restructuring plan following bankruptcy filings.

Impact on Shopping Malls

The closure of anchor tenants has left many shopping malls struggling to maintain foot traffic and occupancy rates. For instance, the Sunrise Mall in New York is facing further decline as retailers like Hot Topic announce closures, contributing to the mall's downturn. This trend has led to predictions that up to 45,000 physical stores across the US could shut down over the next five years due to rising costs and changing consumer habits.​

Asphalt: The Second Most Expensive Asset on the Property

After the building itself, the parking lot is the most expensive capital asset on a commercial property. Yet, many landlords and retailers assume that because a store is closed, asphalt maintenance can wait. That assumption can cost you hundreds of thousands—even millions—of dollars when you need to repair or replace a failing lot.

What Happens When You Defer Maintenance?

Parking lots begin to deteriorate immediately when left unmaintained. Without routine care:

• Year 1-2: Small cracks begin forming due to seasonal freeze-thaw cycles.
• Year 3-5: Cracks widen, allowing water to penetrate and weaken the subbase.
• Year 5-7: Major pavement failures emerge—potholes, alligator cracking, and subbase erosion.

By the time a new tenant or buyer is interested, what could have been a $10,000 annual maintenance expense becomes a $500,000+ full-depth reconstruction project.

Why This Matters for Landlords & Property Owners

If you own a shopping center or standalone retail property that once housed a national chain, asphalt conditions will play a major role in your ability to attract a new tenant or buyer.

🚧 Lower Property Value – A poorly maintained lot signals neglect and justifies lowball offers from buyers.
🚧 Lost Leasing Opportunities – National retailers seek turnkey spaces—a failing parking lot is a dealbreaker.
🚧 Higher CapEx Costs – Deferred maintenance means pavement reconstruction, which is 5-10x more expensive than routine repairs.

Why Retailers Should Care (Even if They Don’t Own the Property)

For retailers leasing dark stores, it is common for most lease agreements to include specific responsibilities related to the maintenance of the parking lot. This means that if you, as a retailer, are required to repair and maintain the parking lot before returning the property to the landlord, any deferred maintenance can lead to a significant increase in your costs.

The expenses associated with neglecting regular upkeep can quickly escalate, turning what might have been manageable repairs into costly overhauls. By adopting a proactive approach to parking lot maintenance, you can effectively avoid hefty end-of-lease penalties and prevent unexpected repair bills from catching you off guard. Regular inspections, timely repairs, and consistent upkeep not only ensure compliance with lease terms but also safeguard your financial interests by minimizing the risk of incurring substantial costs at the end of your lease term.

A Simple Plan to Preserve Your Property’s Value

Whether you’re a landlord looking to re-lease or sell a dark store or a retailer hoping to reopen in the future, here’s how to keep your asphalt in good shape:

✅ Annual Crack Sealing – Prevents small cracks from becoming potholes.
✅ Sealcoating Every 3-5 Years – Protects against UV damage, oxidation, and water intrusion.
✅ Pothole Patching – Addressing small failures early avoids massive structural damage.
✅ Drainage Maintenance – Ensures water doesn’t undermine the subbase and cause premature failure.

Why Parking Lot Condition is a Key Factor in Lease Negotiations

When retailers evaluate a shopping center or standalone retail space, they don’t just look at the building—they assess the entire customer experience, starting in the parking lot. A deteriorated parking lot can:

1️⃣ Lower Lease Rates & Increase Concessions

• Retailers may demand rent reductions or lease concessions to offset repair costs.
• Some may require the landlord to fully repave or repair the parking lot before signing.

2️⃣ Reduce Tenant Interest & Delay Leasing

• High-profile brands and national retailers prefer turnkey spaces with a safe, well-maintained parking lot.
• A failing lot can scare away potential tenants, increasing vacancies and forcing landlords to settle for lower-tier tenants.

3️⃣ Negatively Impact High-Traffic & Drive-Thru Retailers

• QSR (Quick-Service Restaurants), coffee shops, and grocery stores need a smooth, functional parking lot and drive-thru.
• Example: A Starbucks or Chick-fil-A will scrutinize drive-thru lanes and high-traffic areas. If the pavement is in bad shape, they may pass on the location or demand repaving.

4️⃣ Hurt Anchor Tenant & Big-Box Retailer Deals

• Large retailers like grocery stores and department stores need a well-designed, high-capacity parking lot.
• Example: A major chain like Trader Joe’s may require a landlord to redesign traffic flow, repave, or add speed bumps before committing to a lease.

5️⃣ Create ADA Compliance & Accessibility Issues

• Retailers must comply with the Americans with Disabilities Act (ADA), which requires:
  ✅ Properly marked handicapped parking spaces
  ✅ ADA-compliant curb ramps and walkways
  ✅ Smooth, even pavement free from trip hazards
• If the parking lot doesn’t meet ADA standards, retailers may refuse to lease or demand upgrades before signing.

Bottom Line: If the parking lot isn’t well-maintained, retailers will negotiate for lower rents, delay deals, or walk away entirely—costing landlords valuable time and money.

Insurance & Liability Risks: Why Landlords Can’t Ignore Parking Lot Maintenance

From an insurance standpoint, a failing parking lot is a major liability. Deferred maintenance can lead to:

1. Trip-and-Fall Lawsuits

• Cracked pavement, potholes, and uneven sidewalks are the #1 causes of trip-and-fall claims in retail properties.
• Settlements can reach six figures or more—and if the property is found negligently maintained, insurance carriers may:
  🔺 Increase premiums
  🔺 Require expensive inspections
  🔺 Drop coverage altogether

Example: A pedestrian trips over a pothole in front of a former department store and files a lawsuit against the property owner. If it’s proven that maintenance was ignored, the landlord may be held liable for damages, legal fees, and court costs.

2. ADA Compliance Lawsuits

• ADA lawsuits are common in retail properties, especially when parking lots don’t have properly marked spaces, ramps, or compliant walkways.
• Even if no injury occurs, plaintiffs can sue for non-compliance, forcing landlords to pay fines and legal fees.

Example: A retail plaza with faded ADA striping and inaccessible ramps gets hit with an ADA lawsuit. The landlord is forced to settle the case and restripe the lot, delaying lease negotiations and costing thousands.

3. Higher Insurance Costs & Potential Policy Cancellations

• Insurance carriers assess risk factors when pricing commercial property coverage.
• If a shopping center has multiple claims due to poorly maintained parking lots, insurers may:
  ✅ Raise premiums
  ✅ Require costly risk assessments
  ✅ Drop coverage, forcing landlords to purchase expensive high-risk policies

Neglecting the parking lot isn’t just a leasing issue—it’s a legal and financial risk that can cost landlords millions.

How Landlords & Property Owners Can Preserve Property Value

A proactive parking lot maintenance strategy is the best way to protect property value, secure stronger lease deals, and reduce liability exposure.

Here’s how to keep your retail property competitive:

✔️ Annual Crack Sealing & Sealcoating – Prevents cracks from spreading and protects against UV and water damage.
✔️ Pothole & Asphalt Repairs – Keeps the surface smooth and safe for vehicles and pedestrians.
✔️ ADA Compliance Audits – Ensures proper handicapped spaces, ramps, and accessibility features.
✔️ Re-striping & Signage Updates – Improves parking flow, visibility, and curb appeal.
✔️ Lighting & Security Enhancements – Reduces liability risks and improves customer confidence.

Don’t Let a Neglected Parking Lot Kill Your Lease Deals

If you own or manage a shopping center, your parking lot is a direct reflection of your property’s value. Retailers prioritize locations that offer a safe, well-maintained, and accessible experience for their customers.

Landlords who invest in proactive parking lot maintenance can:
✔️ Negotiate higher lease rates
✔️ Attract national retailers & anchor tenants
✔️ Avoid costly liability claims & insurance hikes
✔️ Prevent ADA compliance lawsuits

Bottom Line: A well-maintained parking lot isn’t just a cosmetic improvement—it’s a critical factor in lease negotiations, legal risk management, and long-term property value protection.

Final Thoughts: A Well-Maintained Parking Lot Protects Your Investment

If you own or manage a vacant retail property, don’t wait until it’s time to lease or sell to address parking lot maintenance. A deteriorated parking lot can kill lease deals, lower property value, and expose landlords to costly lawsuits.

✅ For landlords, a well-maintained lot secures higher rents, attracts strong tenants, and minimizes liability risks.
✅ For retailers, it ensures a positive customer experience, brand alignment, and a safer shopping environment.

Need help ensuring your parking lot meets retail leasing and liability standards? Let’s talk about a maintenance plan that protects your investment and keeps your shopping center competitive.

Don’t let a neglected parking lot cost you your next big lease deal. Let’s discuss how a proactive asphalt maintenance plan can protect your investment and keep your retail property market-ready.