A New Lease on (Your Business) Life
According to a recent Wall Street Journal blog, vacancy rates at malls and shopping centers in the top U.S. markets have climbed to their highest rates of this decade: 7.9% for malls and 9.5% for smaller, open-air shopping centers.
In today’s challenging economy, many struggling retailers – and residents – are approaching their landlords and asking for financial assistance or a reduction in their monthly rental payments. This practice, once considered a drastic measure, has actually become very commonplace.
Contrary to appearances, the parties are not on opposing sides. Both have the same goal: to keep the renter in business so he can continue to pay the rent. Facing a potentially long recession, it benefits both parties to come to an understanding in these situations.
Retail vacancies are on the rise, even in our own town of Ridgefield. If landlords and tenants come to an agreement, the lessee can continue to run his business, and the landlord continues to have a paying tenant. Of course, the terms of the negotiations should be agreed upon beforehand and clearly spelled out. It is also beneficial to have an attorney present to mediate or help resolve any potential conflicts.
Retail property owners that consent to abatement are putting their own financial future at risk. They also need to thoroughly analyze which of their tenants is deserving of the break; in other words, who is likely to succeed?
Tenants and renters cannot take a “hardball” approach to the situation, despite its frequency in these economic times. They should be willing to make concessions, put limits on the agreements and fully cooperate with the landlord.
Image: New co-working reception area, Executive Pavilion, Ridgefield
