Commercial Lease Disputes in the Post-Pandemic Era

Six years after the initial pandemic lockdowns reshaped office culture globally, the commercial real estate market is still absorbing the aftershocks. Vacancy rates in major business districts remain elevated. Hybrid work is the new normal. And the disputes flowing from these seismic shifts are landing on our desks with increasing frequency.

Both tenants seeking to reduce their space obligations and landlords protecting long-term lease income are encountering a body of law that has been stretched by novel facts and tested by courts still developing doctrine to address them. This article examines the key legal battlegrounds.

1. Force Majeure: Five Years On

In 2020, commercial tenants globally attempted to invoke force majeure clauses to excuse rent payment during government-mandated closures. Most of those attempts failed — courts in England, the US, Singapore, and elsewhere consistently held that the pandemic did not make lease obligations "impossible" in the strict legal sense, even when premises were inaccessible.

The legacy of those decisions is important: courts have now firmly established that economic hardship, even extreme hardship caused by an unforeseeable external event, does not typically trigger a force majeure clause in a commercial lease unless the clause explicitly encompasses the specific type of interference at issue. Tenants negotiating leases today must ensure their force majeure provisions are drafted with specificity and breadth.

"The pandemic cases taught us that 'frustration' and 'force majeure' are legal doctrines, not moral claims. The courts are not going to rewrite your lease because circumstances changed dramatically."

— Marcus Wright, Partner, Real Estate, Dominion Legal Chambers

2. The Rent Review Battlefield

In 2026, a wave of rent reviews — many linked to pre-pandemic leases signed at peak rental values — are now coming due. The collision of contractually agreed review mechanisms (often upward-only clauses pegged to CPI or open market value) with a commercial property market that has structurally deflated in many sectors is generating significant dispute volume.

Key contested issues include: the identification of appropriate comparable transactions in a thin market; the extent to which post-pandemic "flexible" lease terms constitute valid comparables; and in upward-only review clauses, whether any downward adjustment mechanism can be implied by courts in jurisdictions that have moved to scrutinise such clauses more carefully.

3. Break Clauses and the Hybrid Work Question

Break clauses — tenant options to terminate a lease early upon satisfaction of specified conditions — have become the most intensively litigated area of commercial property law in the post-pandemic period. The conditions attached to break rights (no rent arrears, vacant possession, compliance with covenants) have been interpreted strictly by courts, meaning that a tenant who intends to exercise a break right must take meticulous steps months in advance.

The hybrid work model has created a specific challenge: tenants who want to break a lease but cannot achieve "vacant possession" because their premises contain fit-out that technically constitutes a landlord's fixture. Disputes around what must be removed and what can be left, and what constitutes a reinstatement obligation, are now common.

4. Green Lease Obligations: The New Frontier

An emerging area of commercial lease dispute concerns "green lease" obligations — clauses requiring landlords and tenants to cooperate on energy efficiency, sustainable building standards, and ESG reporting. As environmental regulation intensifies, the legal obligations embedded in these clauses are becoming increasingly onerous and disputes are arising around: which party bears the cost of energy efficiency upgrades; whether a tenant's change of use (e.g., converting to a data centre) breaches a green lease obligation; and what remedies are available for non-compliance.

Strategic Recommendations for Tenants and Landlords

• Audit Your Portfolio Now: Review all leases with rent reviews or break options coming due within the next 24 months. Identify commercial priorities and legal exposures early.
• Document Everything: In any dispute scenario, contemporaneous documentation of the parties' conduct and communications is often decisive. Maintain records systematically.
• Consider Alternative Resolution: Many commercial lease disputes are well-suited to expert determination or mediation — faster, cheaper, and more commercially sensitive than litigation.
• Re-draft Future Leases: The pandemic has revealed numerous gaps in standard lease precedents. Use this moment to ensure your next lease is drafted for resilience.

Conclusion

The commercial real estate market is in a structural transition, and the legal framework governing landlord-tenant relationships is evolving with it. Dominion Legal Chambers advises both landlords and tenants on the full spectrum of commercial property disputes, from rent review negotiations to contested break right exercises to green lease enforcement.