Co-tenancy's Tough Terms
The article discussed co-tenancy clauses and the challenges they have brought for retail tenant landlords during tough economic periods. These clauses are sometimes included in lease contracts and often specify that retailers can pay reduced rent or terminate their lease if other tenants have left or overall occupancy of a property dips below a certain level.
The article indicated that co-tenancy could soon become a problem for landlords with many retailers reeling from the struggling economy. “Co-tenancy definitely has the potential to exacerbate a landlord’s problems,” Mr. Fayne said. “And it’s more than just an immediate cash flow problem. As rental income drops, the owners have fewer resources to put into the property. Over time the center begins to look like a dying property.” Mr. Fayne suggests that landlords can use preventative strategies to help keep them from losing a tenant.