Leasing Tip of the Day: Embracing Change

2024, 2025, 2026, 2027…

I was asked to participate in a strategy session for a large retail portfolio this week. We were looking into the future – way into the future. Most of the shopping centers were 100% leased, and tenant demand is increasing to high levels they’ve not experienced in a long time, if ever.

But how do we capture the current interest for the future gain? That’s the question.

Especially with leases.

I always like to start with sales. Because sales are the windows to the world.

What we found is that a few tenants (who were paying under market) had decreasing sales. These sales had not been reviewed in a bit. One strategy is to offer an early termination with a payout so we can backfill their space with a much higher rent and a better tenant. That exercise is in process as we speak.

Another opportunity is extra land for a potential outparcel – however, no build zones exist in a couple anchor leases. Calculating future income and value and coming up with an offer to pay these anchors for the swap is an option.

When we looked at the remedy on a default of the No Build – it was reducing contract rent to % rent. Once we calculated the new income over the remedy based on current sales, it may be worth the risk. The jury is still deliberating on this.

The point is….
We are in an unprecedented time.

Are we stopping for a second and taking stock and thinking ahead?

And reviewing all the possibilities?

If not…..

Please do!