Mall landlords may find tenants want reduced rents or to cancel their leases following the collapse of Sears.
The advantage to retailers of being in malls with ‘big-draw’ stores is often protected in the lease by a co-tenancy clause giving them a way out, or compensation at least, if the crowd-puller leaves.
One firm that has stated that its policy is to invoke such clauses is Gap according to a report in the Globe and Mail.
It says that Gap and Children’s Place are calling for a temporary freeze on co-tenancy agreements imposed during Sears’ insolvency process should be lifted. Neither firm has commented.
A similar situation followed the closure of Canada’s Target stores with some retailers challenging the ban on co-tenancy agreements being invoked.
The article quotes lawyer Lou Brzezinski of Blaney McMurtry LLP who believes landlords and tenants may see legal action to settle the matters.