City Ready to Strike Restrictive Lease Deals

CHICAGO-In a move being watched—if potentially copied—from Atlanta to British Columbia, Chicago aldermen are likely to prohibit restrictive use covenants on 7,500-sf leases or greater involving grocery and pharmacy tenants as early as next month. While a formal vote will not be taken until next month, the consensus of a joint meeting of the zoning as well as economic, capital and technology committees was unanimous Thursday.

If passed by the city council, which could come as early as next month, the law would grandfather restrictive use covenants in place before May 11, when 1st Ward Alderman Manuel Flores and 39th Ward Alderman Margaret Laurino introduced the measure aimed at reducing the number of shuttered grocery stores across the city. However, restrictive use covenants would be allowed for up to three years if the tenant relocated within a half-mile of the vacated store and completed the move within two years.

While leases often allow prospective anchor tenants to bar competitors from renting space at the same shopping center, aldermen are upset by restrictive use covenants that bar competitors from taking over space vacated by grocery or pharmacy operators. “Every community should have access to food, every community should have access to medication,” says Flores, who discovered a restrictive use covenant during negotiations to bring a Dominick’s store to his ward.