Kick-Out Clause (Co-Tenancy / Sales)
A kick-out clause is a tenant-favorable lease provision allowing the tenant to terminate the lease early (or substantially reduce rent) if specified conditions are not met — most commonly minimum sales thresholds or anchor co-tenancy requirements.
Kick-out clauses give tenants — particularly in retail centers — a path out of a struggling deal. The two most common varieties: a sales-based kick-out (tenant can terminate if gross sales fall below a stated threshold after a measurement period) and a co-tenancy kick-out (tenant can terminate if a named anchor goes dark or the center occupancy falls below a stated percentage). They are critical risk-mitigation tools for retail tenants but also create meaningful landlord risk that must be priced into the deal.
Sales-Based Kick-Out Structure
Typical: tenant can terminate after Year 3 if gross sales for the trailing 12 months fall below a stated threshold (often the breakpoint used for percentage rent, sometimes a higher level). Termination requires advance notice (90–180 days) and often a termination fee (often equal to unamortized TI and brokerage commission). The threshold is the negotiation: tenants want a high threshold (easy to trigger); landlords want a low threshold (hard to trigger).
Co-Tenancy Kick-Out Structure
Tenant can terminate if a named anchor tenant ceases operations or vacates, or if center occupancy falls below a stated percentage (typically 60–75%). Most commonly used by national retail tenants in grocery-anchored or mall settings where co-tenant traffic drives the business case. Tenants may have a graduated remedy: percentage rent reduction first, then full kick-out if the condition persists.
Landlord Risk Management
Kick-out clauses expose the landlord to cascading defaults: an anchor goes dark, triggering co-tenancy kick-outs on inline tenants, triggering further anchor and inline departures. Sophisticated landlords negotiate narrow kick-out triggers, require waiting periods before kick-out becomes effective, and structure remedies as graduated rather than immediate.
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Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
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Frequently Asked Questions
What is a kick-out clause in a commercial lease?
A tenant-favorable lease provision allowing the tenant to terminate early (or substantially reduce rent) if specified conditions are not met. The two main types: sales-based (tenant gross sales below threshold) and co-tenancy (named anchor goes dark or center occupancy falls below threshold).
What is a sales-based kick-out?
A provision allowing the tenant to terminate the lease early if gross sales for a measurement period fall below a stated threshold. Common in retail leases — gives the tenant a path out of an unprofitable location. The sales threshold is heavily negotiated; tenants want it high, landlords want it low.
What is a co-tenancy kick-out?
A provision allowing the tenant to terminate if a named anchor tenant ceases operations or vacates, or if center occupancy falls below a stated percentage (typically 60–75%). Critical protection for inline retail tenants whose business depends on anchor-driven center traffic.
Do kick-out clauses require a termination fee?
Many do — typically equal to unamortized tenant improvement costs and brokerage commissions. The fee compensates the landlord for capital spent landing the tenant. Termination fees of $0–$15/SF are typical depending on TI package size and remaining lease term.
Article Summary
Kick-Out Clause (Co-Tenancy / Sales) is a foundational commercial real estate concept that Florida investors, owners, and tenants encounter routinely. A kick-out clause is a tenant-favorable lease provision allowing the tenant to terminate the lease early (or substantially reduce rent) if specified conditions are not met — most commonly minimum sales thresholds or anchor co-tenancy requirements. Michael R. Linton at Linton Global Solutions applies Kick-Out Clause (Co-Tenancy / Sales) to every Florida CRE transaction across multifamily, office, industrial, retail, hotels, NNN, distressed, and 1031 exchange execution — backed by 39 years of closed deal experience and REOMind.ai-powered analytics.
Key Takeaways
- ✓A kick-out clause is a tenant-favorable lease provision allowing the tenant to terminate the lease early (or substantially reduce rent) if specified conditions are not met — most commonly minimum sales thresholds or anchor co-tenancy requirements.
- ✓Kick-Out Clause (Co-Tenancy / Sales) is relevant across virtually every Florida commercial real estate asset class.
- ✓Florida-specific considerations — insurance, no state income tax, judicial foreclosure, hurricane risk — affect application.
- ✓Michael R. Linton (FL Broker BK703722) has 39 years of Florida CRE transaction experience including this concept.
- ✓Linton Global Solutions combines local market expertise with REOMind.ai's 96% valuation accuracy.
- ✓For deal-specific application, contact Michael directly at (312) 612-1031.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Internal Revenue Service. "Tax Information for Real Estate Investors." IRS, https://www.irs.gov/. Accessed Jun 13, 2026.
- Florida Department of Business and Professional Regulation. "Florida Real Estate Commission." Florida DBPR, https://www.myfloridalicense.com/. Accessed Jun 13, 2026.
- NAIOP Commercial Real Estate Development Association. "NAIOP Research." NAIOP, https://www.naiop.org/. Accessed Jun 13, 2026.
- Urban Land Institute. "ULI Research Library." ULI, https://americas.uli.org/research/. Accessed Jun 13, 2026.
- Mortgage Bankers Association. "Commercial & Multifamily Research." MBA, https://www.mba.org/. Accessed Jun 13, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.