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The Lean Rent Playbook: How to Avoid Hidden Occupancy Costs
10
6. Unexercised co-tenancy
clauses
In a retail situation, just because a lease has a co-tenancy
clause doesn't mean your rent automatically goes down
when other tenants move out. When a shopping center's
vacancy crosses the threshold outlined in the co-tenancy
clause or an anchor tenant moves out, lease administration
resources at headquarters are typically unaware and store
personnel do not even know a co-tenancy clause exists. And
it is the responsibility of the retailer to notify the landlord of
the co-tenancy clause violation and exercise their right to
reduce rent charges or potentially terminate the lease and
exit an underperforming shopping center.
But the larger your portfolio, the harder it is to monitor
vacancies and confirm when a location meets the conditions
of a specific co-tenancy clause.
Estimated cost: $100,000+ in rent overpayment
The solution: Tango's Co-Tenancy tool captures
and categorizes all co-tenant language f rom every
lease in your portfolio, including vacancy thresholds
and alternate rent structures. You can also
automate periodic surveys that ask store managers
for insight into co-tenant vacancies. Any time
there's a violation of your co-tenancy clause, Tango
flags it for you to bring up with your landlord.
By fully exercising their co-tenancy clauses, our
customers have reduced rent by as much as 60%
on more than one-quarter of their lease portfolio.
