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Before leasing in a retail center, look back at 2017’s shrinking anchors

By in Press Enterprise on December 24, 2017

By Todd Dorn

As 2017 comes to a close, let’s look back at the events that unfolded this year and how they affected small business owners in commercial real estate.

Some of the most notable stories have surrounded the ongoing consolidation of the retail shopping center landscape. With so many big-box retailers’ shrinking (think: Sears, JC Penny’s, Macy’s, Gymboree and many smaller boutique retail brands), the prospective tenant needs to be extra careful when choosing a shopping center in which to place their business — if they are dependent on foot traffic from other retailers.

Office and professional buildings — including industrial spaces — are less affected by such changes in real estate.

For instance, if a business owner is looking to open a store in a shopping center, they must consider today and tomorrow for the future of their business as there are many changes that can take place that could adversely affect their success. If the prospective business owner is reliant on foot traffic from an anchor or major tenant (or even smaller retailers) and those stores close, the expectations for success are likely diminished.

Some ways to prevent this scenario is to include a “go dark” co-tenancy clause in your leases, which means if a major anchor retail store closes, the small business tenant would have the right to cancel its lease or have the rent reduced. There are multiple circumstances that would dictate whether a landlord would agree to such clauses. Factors to be considered first are the type of landlord, size of the shopping center, current vacancies and size of the new business coming into the center and those potentially leaving.

Considering all the retail consolidations, there are many landlords repositioning their centers to reflect the times, so they can keep their successful tenants and attract new ones.

Buying trends in the retail sector […]    

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