The Effects of Big-Box Downsizing on the Retail Side

by James Slusher, Associate Director
Stan Johnson Co.
 
Reacting effectively to the trend among anchor tenants toward downsizing
their footprints is a challenge facing many owners of retail real
estate. Retailers like Best Buy, Circuit City, Sears, Staples, Office
Depot and Office Max have closed stores or reduced their store size.
Investors have to protect their income stream by keeping this empty
space lit and functioning without upsetting covenants, conditions and
restrictions in other tenants’ leases.

Dark space in a shopping center causes immediate dilution of the income
stream even if the original tenant is still paying rent. Vacancy keeps
customers away and hurts all tenants. A major concern for landlords who
are dealing with vacant big box space is the co-tenancy clauses that
might exist in other tenants’ leases. Read the complete article

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