U.S. retail vacancy sat at 6.0 percent in the second quarter of 2026, well under the long-run average of 7.4 percent, according to Cushman & Wakefield’s national marketbeat report.[1] Landlords in a market that tight can usually fill an empty storefront in months, not years. A tenant who defaults and assumes the landlord will do exactly that, and that the lease’s damages will shrink accordingly, is reading the market correctly and the law incorrectly, at least in Virginia.
Bistro Manila opened a restaurant in a Stafford County, Virginia shopping center in September 2020, on a lease that ran to July 2028 and came with a personal guaranty from its owners. The tenant paid through February 2022, then stopped and closed the restaurant. The landlord, Alvah I LLC, sued under the lease’s acceleration clause rather than waiting out the remaining six years one month at a time.[2]
A rent acceleration clause and a state’s default duty-to-mitigate rule are two separate questions, and a lease can win on both without ever crediting the tenant for a replacement.
1. The trial court awarded $410,391.77 in accelerated rent, plus $18,000 in attorney’s fees, and the Court of Appeals affirmed in January 2025. The lease priced the remedy carefully: rather than the full face value of six years’ remaining rent, it discounted the balance to present value at 4 percent annually and built in an offset if the landlord relet the space. That structure is what saved the clause from being struck down as a penalty. Virginia courts, like most, will not enforce a damages clause that lets a landlord collect more than a lease was actually worth. A present-value discount plus a reletting offset is the standard fix, and it worked here even though the landlord never used the offset, because it never relet.
2. Virginia’s common law does not require a commercial landlord to try. The Court of Appeals held that Alvah owed Bistro Manila’s guarantors no duty to mitigate damages by seeking a replacement tenant, full stop. That is the older rule in commercial leasing, still followed in Virginia and a handful of other states, and it is what let the accelerated-rent number stand undiscounted by anything the landlord could have recovered from a new tenant it never went looking for. A landlord in a 6-percent-vacancy market has every practical incentive to relet fast. Virginia law does not make that a legal requirement, so a tenant cannot force the issue by arguing the space was easy to fill.
3. Other states answer both questions differently, and not in the same direction as each other. Massachusetts also declined to require a mitigation credit: in Cummings Properties, LLC v. Hines, the Supreme Judicial Court upheld a $69,000 accelerated-rent judgment using a “single look” approach that asks only whether the clause was a reasonable forecast of damages when the lease was signed, not what happened to the space afterward.[3] Florida requires the opposite. In Horizon Medical Group v. City Center of Charlotte County, the Second District held a landlord who accelerates rent and relets during the accelerated period must credit the new rent against the judgment, because collecting both is a windfall the lease cannot authorize.[4] New York split the difference procedurally rather than substantively: in Elk 33 E. 33rd LLC v. Sticky’s Corporate LLC, the First Department held a landlord who actually relet the space had elected that remedy and could no longer also accelerate, even though the lease offered both options.[5] Three states, three different points at which a landlord’s decision to relet, or not to relet, changes what it can collect.
The guarantors in Bistro Manila found out the same rule that binds the entity binds them personally. A personal guaranty does not get its own, gentler set of defenses; whatever the tenant owes under the acceleration clause, the guarantor owes too, without a separate mitigation argument to fall back on. And Virginia’s no-mitigation default sits on the same spectrum as a contractual mitigation waiver clause: one state reaches the landlord-favorable result through common law with nothing written down, the other reaches it because the lease said so explicitly. A tenant reviewing a lease in a mitigation-waiver state and a tenant reviewing a lease in Virginia end up in the same place by different roads, which makes “does my state require mitigation” a question worth answering before signing, not after defaulting.
Knowing which rule applies before the default happens#
A default remedies section reads the same across a portfolio until it doesn’t. Two leases can both say “landlord may accelerate rent upon default,” discounted to present value at the same rate, and land on opposite outcomes depending on whether the underlying state requires a mitigation credit and whether the landlord actually relets. Acrebase extracts the acceleration and mitigation language from every lease in a portfolio and flags which jurisdiction’s default rule fills the gaps the lease itself leaves open, so a landlord’s remedies team is not relying on someone’s memory of which states are which.
It also applies a firm’s approved clause library automatically, proposing the landlord’s or tenant’s standard acceleration and mitigation language on new deals based on what has actually been negotiated and accepted before, rather than what the last associate happened to draft.
If you are a tenant or a guarantor, do not assume a strong leasing market will shrink your exposure on default; find out whether your state requires the landlord to credit reletting income before you sign, because in Virginia, Massachusetts, and other no-mitigation states, it does not matter how fast the space would fill. If you are a landlord, a present-value discount and a reletting offset are what keep an acceleration clause enforceable as damages rather than struck as a penalty, even in a state that does not require you to use the offset.
Footnotes
[1] Cushman & Wakefield, “U.S. Retail MarketBeat, Q2 2026” (July 2026) — reports national retail vacancy at 6.0 percent, up three basis points quarter over quarter and below the 7.4 percent historical average. https://www.cushmanwakefield.com/en/united-states/news/2026/07/us-retail-marketbeat
[2] Bistro Manila, LLC v. Alvah I, LLC, 83 Va. App. 300 (Va. Ct. App. Jan. 7, 2025), Record No. 0463-23-4 — affirmed a $410,391.77 accelerated-rent judgment plus $18,000 in attorney’s fees, holding the landlord owed no duty to mitigate and the acceleration clause was enforceable as liquidated damages. https://www.vacourts.gov/static/opinions/opncavwp/0463234.pdf
[3] Cummings Properties, LLC v. Hines, No. SJC-13406 (Mass. Sept. 25, 2023) — Supreme Judicial Court reversed the Appeals Court and upheld a $69,000 accelerated-rent judgment under a “single look” test that does not require crediting replacement-tenant rent. https://www.dfllp.com/rent-acceleration-clauses-alive-and-well-after-sjc-decision/
[4] Horizon Medical Group v. City Center of Charlotte County, Ltd., 779 So. 2d 545 (Fla. 2d DCA 2001) — held a landlord that accelerates rent and relets the premises during the accelerated period must credit the replacement rent against the judgment. https://douglasfirm.com/florida-commercial-lease-acceleration-clause/
[5] Elk 33 E. 33rd LLC v. Sticky’s Corporate LLC, 228 A.D.3d 455 (N.Y. App. Div. 1st Dep’t 2024), 2024 NY Slip Op 03132 — held a landlord that relet the premises had elected that remedy and could not also accelerate rent under the lease’s either-or damages provision. https://www.nycourts.gov/reporter/3dseries/2024/2024_03132.htm
Acrebase is AI-powered contract intelligence for commercial real estate — clause extraction, risk flagging, and portfolio-wide search, plus tools for maintaining a consistent clause library and negotiation playbook across every deal a team runs. Learn more at acrebase.com, or get in touch about pricing.