Shopping Centers Today

DEC 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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96 S C T / D E C E M B E R 2 0 1 6 WEIGHING ANCHORS Tenants are embracing updated co-tenancy clauses as landlords get creative with anchor spaces B Y J O E L G R O O V E R I N - L I N E T E N A N T S A R E S I G N I N G leases that make it easier for malls to fill vacant anchor spaces with non- traditional uses. By softening the line on co-tenancy with the likes of Bloomingdale's, JCPenney, Macy's or Sears, chains are bowing to the realities of the decline of the U.S. department store and acknowledging the need for fresh approaches to va- cant space. "The mall retailers are being more flexible with this because they see the value of giving landlords the opportunity to repurpose some of those buildings," said Holly Rome, an executive vice president and director of retail leasing and prop- erty services at JLL. "Things are changing." Mall owners that aim to reuse vacant anchor spaces have plenty of blank slates for their creativity: According to a report published in September by RBC Capital Markets, anchors Dil- lard's, JCPenney, Kohl's, Macy's and Sears have closed a total of 700 stores since 2013. Sears in particular continues to fuel rumors that it may file for bankruptcy in a year or two, having already announced plans in September to close 78 stores across the Sears and Kmart banners. Naturally, the shifting role of de- partment stores is generating new lease language in the mall sector, says Jeff Green, who heads an eponymous retail consult- ing firm in Phoenix. "We are three years into the closing of the department stores, but this has the potential of getting much worse, much faster, given store closings by Macy's and Dillard's and the huge questions now surrounding Sears," Green said. "Leases today cannot be written assuming there will be no de- partment store closures tomorrow." >>

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