What to check before signing a retail lease in a new mixed-use building's ground floor

A case worth studying from the tenant side of mixed-use, since the risk here rarely gets discussed compared to the owner side. A developer finishes a small building, eighteen apartments over two ground floor retail bays. The pitch to a prospective retail tenant is straightforward: eighteen households upstairs, more buildings planned on the same block, and a corner with real foot traffic once the neighborhood fills in. Say a tenant signs a five year lease at 2,300 a month on 1,150 square feet, three months free upfront, personal guarantee on the full term. The detail that gets missed is the lease-up schedule upstairs. In a scenario like this, the building might sit at 30 percent occupancy at opening and still only reach 60 percent fourteen months later, because the apartments were priced for a neighborhood that hadn't arrived yet. Walk-in traffic ends up a fraction of what was planned around, and the shortfall gets absorbed elsewhere in the business. Exiting a lease like that early, say around month 19, commonly costs a termination fee in the range of 18,000, plus whatever buildout gets left behind, easily another 10,000. Call it 28,000 and a year of stress. The fix is procedural. Ask for current occupancy of the residential portion in writing before signing, ask what lease-up looked like over the trailing 90 days, and negotiate the guarantee down to a fixed number of months rather than the full term. A lawyer licensed in the relevant state should review the guarantee language specifically, since that is not something to eyeball.