Co-Tenancy Clause
A co-tenancy clause in a retail lease gives the tenant specific rights (rent reduction, early termination, percentage rent elimination) if anchor tenants close, specified occupancy thresholds aren't met, or other co-tenant conditions are violated.
What it means
Co-tenancy is a retail-lease-specific concept. A junior anchor or inline tenant may negotiate the right to reduced rent or termination if a major anchor goes dark, if overall occupancy drops below a threshold, or if named co-tenants close. These clauses give smaller tenants protection from anchor-driven traffic declines.
Landlords of power centers and regional malls underwriting sales need to understand cotenancy exposure — a cascade of tenant exits triggered by co-tenancy clauses after an anchor closes can rapidly erode NOI.
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