What This Clause Means
When can a commercial tenant close the store without breaching the lease? How going-dark provisions work and interact with co-tenancy clauses.
Going Dark Means Staying in the Lease While Ceasing Operations
'Going dark' is commercial real estate terminology for a tenant who stops operating at their location but remains legally liable under the lease — continuing to pay rent while the space sits vacant. This happens for various business reasons: a struggling retailer might close a poor-performing location while keeping the lease to prevent a competitor from taking the space; a restaurant might pause operations for renovations; a retailer might maintain a presence in a lease with a favorable future buyout option. Landlords hate going dark because a vacant space affects center traffic, undermines the other tenants, and may violate co-tenancy clauses that other tenants negotiated.
Most Commercial Leases Include a Continuous Operation Requirement
Standard commercial lease language for retail: 'Tenant shall continuously operate its business from the Premises during all normal business hours throughout the Lease Term, except for temporary closures due to renovation (not to exceed 30 days) or force majeure events.' This 'continuous operation' covenant means going dark — even while paying full rent — violates the lease. The landlord can declare you in default and pursue termination remedies even though you're paying rent. The practical effect: if your business can't sustain operations at a location, you have no clean option between continuing to lose money while operating and defaulting on the lease.
Why Landlords Insist on Continuous Operation
In percentage rent leases, going dark eliminates the landlord's percentage rent income — if you don't operate, you don't generate sales, and if you don't generate sales, the percentage rent provision produces nothing. For anchor tenants and anchor-adjacent tenants, dark space undermines center traffic and potentially triggers co-tenancy clauses for other tenants. A landlord with a center where several tenants have gone dark faces a cascading effect: reduced traffic, co-tenancy trigger activations, other tenant rent reductions, and a center that enters a death spiral. Continuous operation requirements are how landlords prevent that scenario from being a tenant's risk-free option.
Negotiating Going Dark Rights — When and How
If continuous operation is required by your lease, negotiate carefully. Your strongest position: negotiate a going dark right at lease signing as a defined right rather than something you'd have to beg for later. A going dark right might allow: 60 consecutive days per year of dark operations for renovation or transition; a triggered dark right if sales fall below a minimum threshold; or an indefinite dark right after year 3 if you've fulfilled all lease obligations. In exchange, the landlord might demand: elimination of any percentage rent minimum; a rent increase during dark periods; and immediate surrender rights — the landlord can terminate the lease if you go dark for more than a specified period.
The Landlord's Going Dark Remedies Are Often Severe
If you go dark without a contractual right to do so, landlords typically have a choice of remedies. They can terminate the lease (which may be your goal if the business is failing, but then you face full damages including remaining rent and re-leasing costs). They can seek an injunction forcing you to reopen and operate — courts have actually ordered tenants to reopen failed businesses under continuous operation clauses, which is rarely successful in practice but generates significant legal expense. Or they can claim damages for the economic harm caused by the dark space — reduced co-tenancy payments from other tenants, lost percentage rent, reputational damage to the center. Plan before going dark, not after.
Going Dark Versus Assignment and Subletting
If your business can't sustain a location but you want to avoid the costs of going dark or terminating, consider assignment or subletting as alternatives. Assigning the lease to a creditworthy new tenant (with landlord consent) transfers your obligations entirely. Subletting brings in a subtenant who pays you rent you use to offset your lease obligation. Either option may be more viable than going dark if the space has value. The challenge: assignment and subletting both require landlord approval, which may not be forthcoming if the proposed assignee or subtenant is in a category the landlord has already leased to another tenant.
What to Watch Out For
- Negotiate continuous operation covenants that require you to operate during specified hours
- Include co-tenancy protections triggered when anchor tenants go dark
- Define acceptable limited closure periods (vacation closings, renovations)
- Negotiate that anchor tenant closure triggers your termination or percentage rent right
How to Negotiate This Clause
If continuous operation is required, negotiate: a defined going dark right for up to 60 days per year without cure period requirements; a triggered dark right if sales fall below a floor amount; and a maximum going dark period after which the landlord's sole remedy is lease termination (not injunction or unlimited damages). For percentage rent leases, specify that going dark suspends the percentage rent obligation while the base rent continues.
- Negotiate continuous operation covenants that require you to operate during specified hours
- Include co-tenancy protections triggered when anchor tenants go dark
- Define acceptable limited closure periods (vacation closings, renovations)
- Negotiate that anchor tenant closure triggers your termination or percentage rent right
Example Language: Bad vs. Better
Landlord-Friendly (Risky)
"Tenant shall have the right to cease operations at the Premises at any time while continuing to pay Base Rent and all other charges as they come due under this Lease."
Tenant-Friendly (Better)
"Tenant shall continuously operate in the Premises during normal business hours for the Permitted Use. Failure to continuously operate for more than 90 consecutive days shall constitute a default. If an Anchor Tenant ceases continuous operation, Tenant's rent shall convert to percentage rent until operations resume or Tenant may terminate."
How Going Dark Interacts With Co-Tenancy and Center Dynamics
Going-dark provisions, continuous-operation covenants, and co-tenancy clauses are interlocking: one tenant's decision to close cascades through the center's lease structure and can change the obligations of every other tenant. Understanding the cascade mechanics is necessary to evaluate a going-dark provision in isolation; it almost never operates in isolation.
The Cascade Pattern
A typical anchored retail center contains three tenant tiers: the anchor (a grocery chain, big-box retailer, or department store), the in-line tenants (small retail, food service, services), and outparcels (drive-throughs, banks, standalone retail). The going-dark cascade typically runs like this:
- Anchor closes or goes dark. Either physically vacates (closure) or stops operating while paying rent (dark). Both reduce center traffic; the operational distinction matters legally for what triggers what.
- Co-tenancy clauses of in-line tenants activate. Most negotiated commercial leases at anchored centers include a co-tenancy clause that names the anchor (or names a category of anchor). The anchor closure or dark event triggers the co-tenancy remedy after the contractual cure period (commonly 6 months) elapses.
- In-line tenants drop to alternate rent or terminate. Co-tenancy remedies typically convert base rent to a percentage-of-sales formula (often 5% of gross sales) or grant a termination right if the condition persists. Tenants exercise these remedies based on their own sales trajectory and operating math.
- Reduced rent revenue compresses landlord economics. The landlord faces three simultaneous pressures: lower revenue from in-line tenants exercising co-tenancy, higher difficulty finding a replacement anchor (which is what the cure period was for), and weakening center traffic that further deters replacement tenants.
- Additional in-line tenants go dark or terminate. A center that has lost its anchor and seen co-tenancy remedies fire often loses additional tenants over the following 12-24 months. Each new closure or dark event further reduces traffic, accelerating the cycle.
The "dead mall" pattern that became visible in the 2010s — Sears closes, JCPenney closes, in-line tenants exit, the center deteriorates — is the cascade running to its conclusion. Going-dark and continuous-operation provisions are part of the contractual machinery that landlords use to slow this cycle. Co-tenancy clauses are the corresponding tenant-side machinery that limits the downside of being trapped in a deteriorating center.
Going Dark vs. Closure — Why the Distinction Matters
Many co-tenancy clauses trigger on the anchor "ceasing to operate" or "going dark," not on "vacating" or "terminating its lease." A landlord can sometimes keep a co-tenancy clause from triggering by negotiating with the anchor to remain technically open during a wind-down — a Sears running a multi-month liquidation sale, for example, is still "operating" under most clause language, but the traffic and merchandise mix have already collapsed. Better-drafted co-tenancy clauses address this by requiring the anchor to be "open and operating during normal business hours for its permitted use" or "actively selling merchandise" — language that prevents the landlord from satisfying the condition with a barely-operating anchor.
Retail Patterns by Anchor Type
- Grocery-anchored neighborhood centers. Highest co-tenancy sensitivity. Daily-trip grocery traffic drives in-line tenant economics. A dark grocery anchor commonly triggers co-tenancy across the in-line tenants within 6-12 months of the dark event. Replacement-anchor cure periods of 6-18 months are common in negotiated leases.
- Department-store-anchored regional malls. Slower-burning cascade. Department store anchors are less critical to daily traffic than grocery anchors, but a center with multiple department-store closures (the classic "dead mall" pattern) sees the same cascade play out over 2-5 years. In-line tenant co-tenancy remedies typically allow alternate rent for an extended period before termination becomes available.
- Power centers with multiple big-box anchors. The co-tenancy clauses commonly require multiple anchor closures to trigger remedies, not a single one. This protects the landlord from being subject to remedies the moment one anchor decides to close, but it also means tenants face longer exposure during the early phase of a power-center decline.
- Lifestyle and mixed-use centers with non-traditional anchors. Co-tenancy clauses in these centers commonly anchor on "occupancy percentage" rather than a named tenant — the center must maintain at least 80% leased and operating, or remedies trigger. This insulates the structure from any single tenant departure but ties tenant economics to the overall center performance.
A scan via LiabilityScore reads the continuous-operation covenant, the co-tenancy provisions (if present), and the alternate-rent/termination remedies together to surface what happens to each tenant's economics across the most common anchor-closure scenarios. For more on the related clauses, see the co-tenancy clause reference and the kick-out clause reference.
Frequently Asked Questions
- What does 'going dark' mean in commercial leasing?
- 'Going dark' means a tenant closes their business operations while continuing to pay rent under the lease. Common with large retailers that close underperforming stores but must honor lease obligations.
- Can I go dark in my commercial lease?
- Only if your lease lacks a continuous operation requirement. Most retail landlords require tenants to continuously operate. Violating a continuous operation covenant is a lease default.
- What is a continuous operation covenant?
- A provision requiring the tenant to actively operate their business in the leased space during defined business hours. Used primarily in retail leases to ensure stores are open and contributing to foot traffic.
- How does an anchor going dark affect other tenants?
- A dark anchor is devastating for surrounding tenants — it eliminates the foot traffic draw that justified their location choice. Co-tenancy clauses are designed to provide relief when this happens.
- Can a landlord force me to stay open?
- If your lease includes a continuous operation covenant, yes — staying closed is a lease default. However, many landlords prefer to receive a dark store's rent payments and defer enforcement rather than create a breach that might allow the tenant to exit.