VRN, May 2014

Untangling Lease Co-tenancy

By: Lori Kilberg and Benno Rothschild

Co-tenancy provisions have become commonplace in outlet-center leases, regardless of whether the project is a new phase 1 development, an existing center or a conversion from a traditional retail center. Successful outlet sites require a certain mix of well-known, national tenants to draw traffic. For their part, national retailers, concerned about the initial viability of a shopping center and its continuing success, want landlords to guarantee specific tenant mixes and/or occupancy rates. If those don’t come to pass, the retailer wants a greatly reduced rent or a termination right, or both…

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