As Anchor Stores Close, Co-tenancy Clauses Can Still Cause More Problems

[bing101]

http://nreionline.com/retail/anchor-stores-close-co-tenancy-clauses-can-still-cause-more-problems


Co-tenancy an issue in Malls some of this was a carry over of the "Great Recession"






https://www.youtube.com/watch?v=llbJyh-fMhk

"The co-tenancy clause situation is going to be different in every mall. It is very important and very widespread. Developers are going to want to do different things. My instinct is owners will do whatever it takes to keep those smaller retailers happy,"  says Howard Davidowitz, chairman of Davidowitz & Associates, Inc., a New York City-based retail consulting and investment banking firm.[/font][/size]"In my view, mall developers are not facing the magnitude of the problem. Malls are in a dangerous situation. The growth vehicle for malls is not department stores. Specialty chains are going to have leverage here,"  Davidowitz adds.[/font]
[/color]Gap is one of the retailers reported to be considering using its leverage to this very purpose. Co-tenancy clauses can allow in-line tenants to switch to either percentage rent or reduced rent when an anchor like Macy's goes dark, says Don MacLellan, senior managing partner at Irvine, Calif.-based brokerage firm Faris Lee Investments.[/font]
[/color]"Inline specialty stores are the real rent payers in a mall and many are doing terribly,"  MacLellan notes. He points to PacSun's bankruptcy issues as an example, calling the recent REIT consortium save of Aeropostale an "an unprecedented defense move." [/color][/font]

[GCrites]

People really need to look at the real reason why the logo-apparel inlines and department store anchors are struggling - rather than internet this, internet that it's Hipsters, Nerds, Seniors and lack of white collar jobs.

When the preppies and meatheads ruled the under-30 social hierarchy up until the mid-2000s they needed mall clothes and lots of them in order to fit in. Meanwhile in hipsterland, vintage clothing and secondhand stuff rules. Nerds don't need a lot of clothes to fit in and besides, "fitting in" isn't much currency in the nerd economy. Their clothes are much more likely to have video game or anime characters on them than the name of the store where they were purchased. Seniors mostly buy clothes when they wear out and there are many more in this demo all of a sudden. White-collar jobs require mid-level department store clothes so that people can look good and now those jobs are drying up fast.

[CtrlAltDel]

What is co-tenancy?

[Scott5114]

What is co-tenancy?

The article has this key piece of information infuriatingly buried. As best I can tell, it is when tenants have clauses in their leases that change them to be more favorable to the tenant when an anchor store leaves the mall.

[jeffandnicole]

What is co-tenancy?

The article has this key piece of information infuriatingly buried. As best I can tell, it is when tenants have clauses in their leases that change them to be more favorable to the tenant when an anchor store leaves the mall.

Bing101 included it in his original post above.

[Avalanchez71]

This video shows the winnieificaiton of men with this latest generation.

[formulanone]

This video shows the winnieificaiton of men with this latest generation.

Every generation has been saying this since time immemorial...get over it.

People really need to look at the real reason why the logo-apparel inlines and department store anchors are struggling...

Socially, there's less pressure for youngsters and adults to the abstract concept of "fitting in". Many folks no longer have to look to the same corporate monoliths for their music, their style, their clothing, their food. It's been going on for years, and it's not necessarily a bad thing...people aren't always social outcasts because they're not wearing this-year's shoes.

Conversely, we also live in an age where 30 and 40-year-old buildings are deemed too institutional, bland, and do not fit the aesthetics demanded by these corporations. They all want these open-plan malls, or the faux-downtowns, which are nice in the respect that you can go right to the store you need and not feel as bombarded by threading though 30 minutes of extra walking around the crud you're not interested in.

Funny how that worked out...I think we also had too many shopping malls built over the years. Over-saturation can also be a bit disillusioning.

[GCrites]

What is co-tenancy?

The article has this key piece of information infuriatingly buried. As best I can tell, it is when tenants have clauses in their leases that change them to be more favorable to the tenant when an anchor store leaves the mall.

I definitely need one of those if I am in a strip mall anchored by a major supermarket or a Wal-Mart in it if I am running a traditional retail store. If that anchor shuts down, the people will stop shopping at the other stores. Sure the H&R Block office, medical tenants insurance office, Chinese food, nail salon and cell phone store might do fine, but a store reliant on high foot traffic will be done. These clauses are, and have been, very common in strip malls for a long time. Whereas at an indoor mall if one of the anchors closes I might still do fine.