Mind the Lease: Timely Issues Shaping Commercial Lease Negotiations

From the return-to-office push across Canada and liquidation of the Hudson’s Bay Company in 2025 to the rapid rise of artificial intelligence and broader economic shifts, there is a lot going on in the world of commercial leasing. In turn, several legal issues are becoming central to lease negotiations. 

Below are five timely issues shaping these negotiations.

1. Hudson’s Bay Company Lessons Learned. The refusal of the court to facilitate the forced assignment of leases in the Hudson’s Bay Companies’ Creditors Arrangement Act (CCAA) proceedings is a reminder of the extraordinary nature of section 11.3 of the CCAA and the relief it provides for. The decision provides guidance on section 11.3 (1) of the CCAA, including the importance of the monitor’s recommendation, whether the assignment forms part of a going-concern transaction, and whether the assignee can perform both monetary and non-monetary contractual obligations. The decision also clarifies what will qualify as a true ipso facto clause, which strips value from the insolvent estate.
2. Foreign Lease Guarantors and Indemnifiers. A foreign guarantor can appear attractive but may be difficult to enforce against in practice. Service ex juris requirements, Hague Convention processes, jurisdiction challenges, evidentiary hurdles and judgment enforcement can add months or even years — and significant costs — to enforcing a foreign guarantee. Parties should carefully consider accepting a foreign guarantor and address enforcement risks at the outset.
3. Rise of Amenities. Building amenities are increasingly central to lease negotiations. Tenants are pushing to turn marketing promises into enforceable landlord covenants, including commitments around what amenities exist, who can access them and how they operate. Costs are also a key issue: tenants want clarity on user fees and cost recovery. Amenities are no longer an afterthought in leases; parties should address scope, access, costs and flexibility upfront.
4. Lease Flexibility. Tenants are seeking greater flexibility through expansion and contraction rights, whereas landlords seek predictability. Expansion rights often appear as straight rights, rights of first offer or rights of first refusal, while contraction rights allow tenants to surrender space during the term. Key negotiation points include space availability, pricing, timing, notice requirements and surrender fees intended to compensate the landlord for re-leasing risk. These rights can benefit both parties, but must be structured to reflect business realities and be drafted clearly to avoid disputes.
5. Redevelopment and Demolition. Termination rights tied to redevelopment or demolition have become key terms. Landlords typically seek broad triggers and shorter notice periods to preserve redevelopment flexibility, while tenants push for narrower triggers, longer notice periods, and compensation for items such as relocation or unamortized improvements. These clauses tend to be upheld when they are clearly written and used in good faith. When negotiating, landlords should consider the need for flexibility in future redevelopment, while tenants should ensure they provide enough predictability for their business.

Have more than five minutes? Watch our recent webinar on this topic or contact any member of our Commercial Real Estate group to learn more.