The 1970s and 1980s saw a rise of the mall and the strip shopping center in America, which included the creation of certain restrictions, covenants, easements, and other agreements of record to keep the centers well planned and maintained. These documents are often referred to as REAs – an acronym for reciprocal easement agreements. Most REAs had terms of 25, 50, and even 100 years. Nearly 50 years later, as we continue into the 2020s, more REAs are expiring, leaving anchors, mall owners, and other property owners asking, “What’s next?” It can be easy to quickly agree to extend the REA, but in the modern retail era, this may not be the best approach. Instead, each property owner should review their own goals and concerns and determine whether a more nuanced or creative approach would be appropriate.

When a REA is nearing expiration, certain items can be taken into account when deciding which is the best course of action going forward.

First, what survives the REA?

To determine the best approach, it should first be confirmed what survives the expiration of the REA. Often, easements for access and parking are perpetual and survive the expiration of the document. If an owner’s concerns are addressed in the surviving terms, extension of all terms may not be necessary.

Second, does the current REA make sense in the modern retail environment?

The post-COVID world includes a modernization of what it means to be a shopping center. Traditional REAs often limited the ability to use outdoor spaces for customer engagement, including outdoor entertainment, dining, and seating areas, rooftop improvements for use by consumers, or other areas and amenities that today are considered part of a premium retail experience. REAs also traditionally limited the centers from being true mixed-use developments and prohibited uses that are today becoming more common in shopping centers such that they are not retail-only experiences. Future flexibility for development should be considered against the owner’s own goals to decide whether extending the REA is the best path forward.

Third, should issues be addressed by separate agreements or informal consents rather than extending the REA or recording a new REA?

Instead of extending an expiring REA, one option is to allow the agreement to expire (or to be amended so that it greatly reduces the restrictions and covenants) and instead enter into individual supplemental agreements that the parties can elect to record or not. This method allows for flexibility in the future because amendments can be limited to only the parties to that document rather than including all REA parties. Informal side letters can also be used to identify agreements of the parties that will not need to be approved by all owners at the center.

Ultimately, the next step is not a one-size-fits-all, and owners should engage in thoughtful discussions and analysis regarding goals and risks associated with the different options.