Excerpted from an article in Bloomberg, July 6, 2018, by Lauren Coleman-Lochner and Eliza Ronalds-Hannon

Mall Tenants Had an Out When Giants Like Macy’s Left. Now Landlords Bar the Door.

> Mall owners are pushing to eliminate co-tenancy provisions.
> Removing or limiting clauses gives merchants less flexibility.

“Landlords are now routinely pushing to chisel away co-tenancy provisions when leases come up for renewal,” said Ivan Friedman, head of RCS Real Estate Advisors, a New York consulting firm. “That wasn’t the case even a couple of years ago.”

The definition of what constitutes a key tenant has changed, too. In some cases, it may be a dominant retailer, such as a big-box store, or a high-performing specialty chain.

Even so, landlords are going to remain under pressure, RCS’ Friedman said.

“Everybody is closing stores, everybody is getting lower rents when they do their renewals,” he said. And with the U.S. retail excess estimated at 25 percent, even after earlier shakeouts, “it’s going to continue.”