As retailers continue to close underperforming stores and look for other ways to cut costs in a weak economy, they are closely monitoring and enforcing co-tenancy provisions in retail leases.
The language of the lease is critical in co-tenancy disputes. Issues that arise include:
- What conditions trigger a tenant’s co-tenancy rights? Closure of anchor stores? Closure of stores occupying a certain percentage of the leasable space in the mall?
- What are the remedies in the event of a co-tenancy failure? Reduced rent? Can a tenant close the store?