As Anchor Stores Close, Co-tenancy Clauses Can Still Cause More Problems
September 20, 2016 | by Diana Bell | National Real Estate Investor
As retailers that have traditionally served as mall anchors—be they department store chains or big-box players—announced major store closings this year, co-tenancy clauses have become an area of risk in a shaky market.
Co-tenancy clauses first became a concern for retail property owners 10 years ago, as the Great Recession put pressure on many tenants and store closings and bankruptcies spiked, according to Greg Maloney, president and CEO of Americas retail with real estate services firm JLL. “We have started removing these in the past five-10 years from anchor tenants’ leases, as anchors are not what they used to be in regards to impact on in-line tenants,” he notes.
Macy’s, Sports Authority, Sears and Kohl’s are among the department stores to announce store closings recently. As these stores shutter, what does it mean for both neighboring retailers and the vacated spaces?