News and Events
Tenant Tension
Landlords tread carefully as they try to fill vacancies with new uses.
Dec 18, 2009 Shopping Centers Today Steve McLinden
Current retail leasing models present a vexing catch-22 for many a landlord. If shopping center occupancy drops, lower rents kick in. But when an owner seeks to fill spaces with untraditional and nonretail tenants—a college, say, or a museum—the other tenants cry foul for violation of their co-tenancy lease clauses. The result is more pressure on owners to drop rents, especially if the lease language is less than airtight, observers say.
As landlords in big-box-anchored power centers struggle to maintain occupancy, they are making good lease deals, says Ivan Friedman, CEO of New York City–based RCS Real Estate Advisors. Tenants with leases that do not spell out co-tenancy restrictions are often going to litigation now instead of backing off, says Friedman, whose firm will do 70 million square feet of renegotiations this year. “There is a lot of money at stake.”