Negotiating a Shopping Center Lease: What Landlords Should Know About Co-Tenancy Clauses

New outdoor shopping promenades and standalone stores may have obvious advantages over traditional shopping centers, but with many retailers maintaining a presence in indoor shopping malls and strip shopping centers, the inevitable loss of a property’s anchor tenant can produce a lot of questions ­and concerns for the site’s other resident tenants.

To protect potential lost revenues, many store owners opt for co-tenancy clauses, or a section of the lease agreement that allows for a reduced rent if a key tenant or certain number of co-tenants leaves the retail space.

“A co-tenancy clause is one that enables a tenant to potentially receive reduced rent in the event that an anchor tenant terminates its lease in the property,” Miami-based corporate transactional attorney Matt Kramer told commercial real estate website Leverage.com.

According to Kramer, Partner at Weinberg Wheeler Hudgins Gunn & Dial, co-tenancy clauses aren’t ideal for landlords but there are cases when they may come in handy, especially if the right provisions have been included.

To learn more about the options available to landlords negotiating shopping center leases, read Kramer’s full interview on Leverage.com.