Retail Property Partner Irwin Fayne was quoted in the article "Tenant Tension" published in the December 2009 issue of Shopping Centers Today.
The article discusses challenges faced by shopping center landlords as a result of co-tenancy lease conditions. Co-tenancy leases are often signed by retailers moving into a shopping center that includes other retail businesses. These agreements can contain clauses that are activated when certain conditions occur, such as vacancy in neighboring spaces. For example, national retailers typically sign leases that require three-quarters of a shopping center to be occupied. If tenancy dips below that figure, the rent is cut in half until more occupants move in. If no replacement is found within a set period of time, that retailer is then released from its lease.
"This is the new world of leasing," Mr. Fayne said. "Ten years ago landlords weren’t nearly as cognizant of the broad-reaching effects of co-tenancy lease clauses. Today everything in a lease has come under the microscope." As a result, many retailers have begun dissecting their leases to find rent relief or to find ways to break them without penalty, creating potential problems for shopping center landlords.